The global price of a barrel of oil increased by more than 1% at the close of trading today, Thursday, January 19 (2023), amid fears of declining supplies.
Oil markets compensated for the losses incurred earlier in the session, supported by expectations of an increase in Chinese demand, and more restrictions on Russian exports that may affect supply.
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 – rose by 1.4%, to $86.16 per barrel.
The price of US West Texas crude futures – February 2023 delivery – increased by 1.1%, to $80.33 a barrel, according to data seen by the specialized energy platform.
Oil prices ended their trading, yesterday, Wednesday, January 18, on the decline, after a volatile session, with concerns about slowing economic growth in the United States, after the release of economic data.
demand for oil
The head of the International Energy Agency, Fatih Birol, said today, Thursday, that energy markets may be tighter in 2023, adding that he hopes that the price of a barrel of oil will not rise globally to relieve pressure on developing countries that import energy.
Birol added during his participation in the World Economic Forum in Davos: “Looking at the slightly longer term, I think that the Russian oil industry will face huge challenges.”
He noted that if the Chinese economy rebounds this year, which many financial institutions expect, we may see very strong demand.
Oil market conditions
However, the headwinds of the global economy, the possibility of large interest rate increases and the strengthening of the US dollar have all affected the demand for oil.
Analyst at CMC Markets, Tina Teng, said: “The deterioration of US economic data overshadowed the outlook for oil demand, with recession fears escalating again.”
She pointed out that risk-averse sentiment led to a decline in growth-sensitive commodities, adding that profit-taking contributed to the decline in the price of a barrel of oil globally.
US retail sales for December fell by the most in a year, while industrial production posted its biggest drop in nearly two years; Higher borrowing costs hurt demand for commodities.
However, Fed officials said interest rates should rise beyond 5% even as inflation shows signs of peaking and economic activity slows.
“This raised the specter of a recession, with risk appetite suffering as a result,” ANZ Research analysts said in a note to clients.
US oil stocks
Data from the US Energy Information Administration showed that oil inventories in the United States increased by 8.4 million barrels, in the week ending January 13.
The average forecast from a Reuters poll of 9 analysts was for a decline of about 600,000 barrels.
The data also showed a decline in distillate stocks, which include diesel and heating oil, by 1.9 million barrels, compared to analysts’ expectations, for an increase of 120 thousand barrels, while gasoline stocks rose by 3.5 million barrels.
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