The price of a barrel of oil declined globally at the end of trading today, Wednesday, January 18 (2023), after a volatile session, with concerns about slowing economic growth in the United States, following the release of economic data.
Crude prices rose during the session, with optimism that lifting the strict restrictions imposed by China on Corona will lead to a recovery in fuel demand in the world’s largest oil importer.
The International Energy Agency expects global oil demand to rise by 1.9 million barrels per day in 2023, reaching a record level of 101.7 million barrels per day.
The global price of a barrel of oil today
At the end of the session, the prices of benchmark Brent crude futures – for delivery in March 2023 – fell by about 1.1%, to $84.98 a barrel.
The price of US West Texas crude futures – for February delivery 2023 – fell by 0.9%, to $79.48 a barrel, according to data seen by the specialized energy platform.
Oil prices ended their trading yesterday, Tuesday, January 17, on the rise, amid hopes for a recovery in demand.
Chinese demand
China’s economic growth slowed sharply to 3% in 2022, missing the official target of 5.5%, and marking the second-worst performance since 1976.
But the data still exceeds analysts’ expectations, after China began to back away from its policy of not spreading the Corona virus in December, as analysts polled by Reuters see that growth in 2023 will rebound to 4.9%.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that Chinese oil demand will grow by 510,000 barrels per day this year.
But OPEC kept its forecast for global demand growth in 2023 unchanged, at 2.22 million bpd.
On the other hand, US data showed that retail sales in the United States fell by 1.1% in December 2022, in a sign of slowing economic growth in the country.
fuel demand
“The growing hopes that fuel demand in China will recover after the recent shift in its policy on Corona, which provided support for the price of a barrel of oil globally,” said analyst at Fujitomi Securities Co., Ltd., Toshitaka Tazawa.
He added that OPEC’s optimistic outlook on Chinese demand also supported market sentiment, “anticipating a bullish tone this week.”
The market also received support from expectations of a decrease in US crude stocks by about 1.8 million barrels, despite the rise in oil product stocks, from a Reuters poll.
US oil production
On the supply side, oil production from major US shale regions is set to rise by about 77,300 bpd to a record 9.38 million bpd in February, the US Energy Information Administration said in a production report on Tuesday.
Meanwhile, Russia expects Western sanctions to have a significant impact on its oil product exports and production, which could affect crude oil sales, said a senior Russian source familiar with the country’s future.
“Potential supply losses from Russia and the reopening of China could quickly tighten the market,” ANZ analysts said in a note to clients.
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