Crude oil prices rise by more than 2%, the highest level since January – (update)

Crude oil prices rise by more than 2%, the highest level since January – (update)

Crude oil prices rose by more than 2% at the end of trading today, Tuesday, April 11 (2023), after a volatile session, to record the highest level since January 2023.

This comes after Chinese inflation data indicated continued weak demand, but the dollar fell and expectations that the Federal Reserve will stop tightening its policy support the rise in oil prices.

Crude oil prices had started their morning dealings on the rise, with fears of a shortage of supplies, the return of demand for oil in Asian countries, and expectations of a decline in US crude stocks, then turned to decline, before rising again.

The Energy Information Administration raised its oil price forecast by nearly 3% in 2023, but lowered its crude demand estimate.

Crude oil prices today

At the end of the session, benchmark Brent crude futures – for June 2023 delivery – rose 1.7%, to record $85.61 a barrel.

West Texas Intermediate crude futures – for May 2023 delivery – rose 2.2%, to record $81.53 a barrel, the highest close for this most active contract since January 23, 2023, as seen by the specialized energy platform.

And crude oil prices ended their trading, yesterday, Monday, April 10, down by about 1%, with the rise of the dollar and fears of increasing interest rates in the United States, following the monthly jobs report.

Oil market analysis

Data from China showed that consumer inflation in March reached its slowest pace since September 2021, indicating continued weak demand amid an uneven economic recovery, prompting expectations that Beijing may take steps to boost growth.

See also  Crude oil prices continue to decline… and Brent is below $74
Crude oil prices
Oil tanks near a port in Japan – Photo courtesy of Reuters

“China’s consumer price index for March is lower than expected, which may boost the Chinese government to stimulate the economy further,” said CMC Markets analyst Tina Ting.

Crude oil prices got a boost as the dollar weakened on expectations that the Federal Reserve is nearing the end of its rate hike cycle.

“With more central banks pausing interest rate hikes, such as the Reserve Bank of Australia and the Bank of Korea, the Fed’s expectations of less tightening have been strengthened,” Teng said.

Prices were also supported by signs of strong fuel demand in India, the world’s third largest oil consumer, in March.

Last month, fuel consumption jumped 5% from a year earlier to a record 4.83 million barrels per day.

oil supplies

“The short-term crude oil demand outlook will become clearer this week,” said Edward Moya, senior analyst at OANDA.

He added, “Wall Street should have a strong control over the course of the economy after it gets the pivotal inflation report,” according to Reuters.

Oil futures have risen more than 5% since the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, announced last week a new round of production cuts, starting next May.

OPEC + raised the total size of the alliance’s cuts to 3.66 million barrels per day, including a cut of two million barrels in October, equivalent to about 3.7% of global demand.

On the US supply side, the American Petroleum Institute data on US oil inventories is scheduled to be released later today, Tuesday.

An average of 5 analysts polled by Reuters estimated that crude inventories fell by 1.3 million barrels in the week ending April 7.

See also  Oil and gas production in Norway may rise to record levels in 2023

The US inflation report, which will be released on Wednesday, may help investors gauge the path of interest rates in the near term.


Posted

in

by

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *