Crude oil prices rose, during today’s trading, Thursday, February 16 (2023), amid hopes for an increase in demand.
The rally comes after two days of decline; Hopes for a strong recovery in fuel demand in China, the largest oil consumer, compensated for the losses resulting from the strength of the dollar and the increase in US oil inventories.
Crude oil prices today
By 07:22 a.m. GMT (10:22 a.m. Mecca time), the price of benchmark Brent crude futures – for April delivery 2023 – rose 0.67%, to $85.95 a barrel.
The price of US West Texas crude futures – delivery in March 2023 – increased by 0.90%, to $79.30 a barrel, according to data seen by the specialized energy platform.
Crude oil prices ended their trading, yesterday, Wednesday, February 15, with a decline in a volatile session after the release of the US inventories report.
demand for oil
The International Energy Agency said oil demand will rise by 2 million barrels per day in 2023, up 100,000 barrels per day from last month’s forecast to a record 101.9 million bpd, with China increasing demand by about 900,000 bpd.
The agency, which is based in Paris, indicated that China will account for nearly half of the growth in oil demand in 2023 after easing Corona restrictions.
The US dollar, which moves inversely to crude oil prices, rose on bullish US retail sales data and clung on to most of those gains on Thursday.
Vandana Hari, founder of the Vanda Insights Center on Energy Markets, said: “The optimistic outlook of OPEC and the International Energy Agency regarding China has helped push up crude oil prices.”
She added, “The hopes for an increase in demand met the net increase in the weight of building US oil stocks, but I do not see more price increases so far.”
US oil stocks
The Energy Information Administration said that US crude oil inventories jumped, last week, by 16.3 million barrels to 471.4 million barrels, the highest level since June 2021.
The larger-than-expected increase was largely due to the data revision, which analysts said mitigated the impact on crude oil prices.
“Crude oil prices are expected to fluctuate in a limited range, caught between divergent supply and demand dynamics,” said independent market expert, Sugandha Sachdeva.
“While the steady rise in US production and swelling inventories along with the broad recovery in the dollar act as headwinds to crude oil prices, the story of a strong demand recovery from China and prospects of a production cut linked to Russia continue to lift prices,” she added.
oil production
The International Energy Agency said that oil production is expected to decline by about 1 million barrels per day by the end of the first quarter, in the wake of the European ban on seaborne imports and international price cap sanctions.
Analysts at the Commonwealth Bank indicated, in a note, that OPEC + will not look to increase production to compensate for the decline in Russian production, Reuters reported.
The note added that this means that the responsibility will fall on the United States and other non-OPEC producers to boost production, not only to compensate for the decline in Russian production, but also to meet any additional increase in global oil demand.
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