The global price of a barrel of oil witnessed a volatile session at the end of trading today, Wednesday, January 25 (2023), with the release of US inventories data, and amid hopes for increased demand.
After prices fell by more than 1% during trading, US crude ended today’s session marginally higher, while Brent fell slightly.
This comes amid optimism about the recovery of demand in China, the largest oil importer in the world, and expectations that the main producers will maintain the current production policy, which offset fears of a global recession.
The global price of a barrel of oil today
At the end of the session, the futures prices for Brent benchmark crude – delivery in March 2023 – decreased by a marginal rate of 0.01%, equivalent to one cent, to reach $86.12 a barrel, after it ranged between $85.41 and $87 a barrel during the session.
While the price of futures contracts for US West Texas crude – delivery in March 2023 – increased by a marginal rate of 0.02%, to $ 80.15 a barrel, after declining less than $ 80 during trading, according to data viewed by the specialized energy platform.
And oil prices ended their dealings, yesterday, Tuesday, January 24, with a decrease of more than 2%, amid fears of a slowdown in the US economy.
demand for oil
“Expectations that Chinese fuel demand will recover in the second half of the year is increasing, and is likely to support market sentiment,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Analysts from Bank of America Securities said that the reopening of the Chinese economy after years of strict restrictions related to the Corona virus could unleash a large wave of pent-up demand over the next 18 months.
On the supply side, volumes should remain steady over the medium term, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, in the alliance known as OPEC+, are expected to keep their production policy unchanged.
OPEC+ meeting
5 sources in OPEC + said, yesterday, Tuesday, that the OPEC + committee is likely to endorse the current oil production policy for the group of producers when it meets next week, as hopes for an increase in Chinese demand balance with concerns about inflation and the global economy, according to Reuters.
And OPEC + decided in October to reduce production by two million barrels per day from November until the end of December 2023, in light of expectations of a decline in global economic growth.
US oil stocks
The price of a barrel of oil globally came under pressure as oil inventories in the US rose against expectations during the past week.
US crude inventories rose by about 0.5 million barrels in the week ending January 20, to reach 448.5 million barrels.
However, Kikukawa expects the rise in stocks to be temporary, as supply disruptions from the cold wave in the US a few weeks ago will only affect data in the next two weeks.
Kikukawa expects WTI to trade in a range of $75-85 per barrel in the coming weeks.
interest rates
The markets are also watching interest rate decisions from central banks for more trading signals.
“It seems that the absence of the Fed’s hawkish comments on the current blackout period has removed a major drag on risk sentiment for the time being, providing some renewed impetus to growth,” said IG Market Analyst, Yip Jun Rong.
The analyst added that investors are waiting to see if the US Federal Reserve will “react to the recent surprise drop in inflation and growth” when it meets next week.
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