The global price of a barrel of oil turned upward, during today’s trading, Monday, January 23, 2023, with the prospect of an economic recovery in China, the largest oil importer this year.
The oil markets had started trading on a decline amid limited trading due to the Lunar New Year holiday in East Asia, maintaining most of the gains achieved during the past week.
The global price of a barrel of oil today
By 09:24 a.m. GMT (12:24 p.m. Mecca time), the prices of benchmark Brent crude futures – for delivery in March 2023 – rose by 0.24%, to $87.84 a barrel.
The price of US West Texas crude futures – delivery in March 2023 – increased by 0.18%, to $81.79 a barrel, according to data seen by the specialized energy platform.
On Friday, January 20, 2023, oil prices ended their dealings, with an increase of more than 1.5%, to reap weekly gains for the second time in a row.
Both crudes (Brent and West Texas Intermediate) achieved weekly gains of about 2.7% and 1.8%, respectively, during the past week.
Oil market conditions
Analysts said that optimism about China’s reopening is likely to push the global oil price higher.
Mumbai-based director of energy consultancy Trifecta, Sukrit Vijikar, said the market wanted to hold long positions in case Chinese growth resumed.
Commodities analysts at ANZ said in a note that the data shows a strong recovery in travel in China after the easing of coronavirus restrictions, pointing to a 22% jump in road traffic congestion so far this month compared to the year before.
energy markets
The head of the International Energy Agency, Fatih Birol, said on Friday that energy markets may tighten this year if the Chinese economy recovers in the way financial institutions expect it to.
“I wouldn’t be too relaxed about markets, and 2023 could be a year in which we will see tougher markets than some colleagues might think,” Birol said, on the sidelines of the annual meeting of the World Economic Forum in Davos, according to Reuters.
The jump in traffic in China ahead of the Lunar New Year holiday bodes well for fuel demand after a two-week holiday.
Russian oil products
“The expected increase in demand comes as the market prepares for further sanctions on Russian oil,” said ANZ analysts.
The EU-G7 alliance will cap prices for Russian refined products starting February 5, in addition to the Russian crude price cap in place since December and the EU’s ban on Russian crude imports by sea.
The G-7 agreed to postpone the review of the Russian oil price cap to March, a month later than originally planned, to give time to assess the impact of the ceiling on oil products.
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