The price of a barrel of oil rose globally by more than 3% at the end of trading today, Wednesday, January 11 (2023), as fears of supply shortages overshadowed the state of economic uncertainty.
Market participants were pulled in different directions by an unexpected increase in US oil and fuel inventories, global economic uncertainty and China’s reopening of its economy.
The global price of a barrel of oil today
At the close of trading, the prices of benchmark Brent crude futures – for delivery in March 2023 – rose by 3.2%, to $82.67 a barrel.
The price of US West Texas crude futures – for February delivery 2023 – increased by 3.1%, to $77.41 a barrel, according to data viewed by the specialized energy platform.
And crude oil prices ended their trading, yesterday, Tuesday, January 10, 2023, on the rise, after a volatile session, as hopes of increased demand from China overshadowed fears of an economic recession.
US oil stocks
US Energy Information Administration data showed that crude oil inventories jumped 19 million barrels in the week ending January 6, to reach 439.6 million barrels.
At the same time, distillate stocks, which include heating oil and jet fuel, rose by about 1.1 million barrels.
Analysts polled by Reuters had expected crude stocks to drop by 2.2 million barrels, and distillate stocks to drop by 500,000 barrels.
The analyst at CMC Markets, Leon Lee, said that the large increase in US inventories caused the price of a barrel of oil to drop globally, while the risk of recession also limits the upward trend in oil prices in the short term.
demand in China
The price of a barrel of oil rose globally earlier this week, on hopes of growing fuel demand in China, the world’s second largest oil consumer, after it eased coronavirus restrictions and allowed the resumption of international travel.
The price of a barrel of oil did not jump globally, but it gained some support from hopes for growth in fuel demand in China, the second largest oil consumer in the world after the United States, after Corona restrictions were eased, and crude import quotas increased by 20%.
“It is clear to market players that China’s return to normal life will not be enough to push oil above $100 a barrel on a sustainable basis,” said BVM analyst Stephen Brennock.
“What is needed is an improvement in global growth. However, the outlook for the global economy is constrained by high inflation rates and tightening credit conditions,” he added.
Oil market conditions
The price of a barrel of oil has declined globally due to concerns that sharp increases in interest rates to tame inflation may lead to stagnation and reduce demand for fuel.
“The market sentiment is bearish on the demand side, as China is still dealing with a large-scale coronavirus outbreak and the US and Europe are at risk of an economic slowdown, with minimal supply disruptions for now,” said Claudio Gallimberti, Senior Vice President, Rystad Energy. .
The market structure for futures reflects weak demand, with both Brent and WTI contracts for the next month remaining flat, as the spot month prices trade lower than the forward month prices, usually a sign of lower demand for oil in the short term.
The big focus this week is on inflation data in the United States, due for release tomorrow, Thursday, and analysts believe that if inflation comes in below expectations, it could lead to a decline in the dollar, which could increase demand for oil because it makes the commodity cheaper for buyers who hold other currencies. .
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