Oil Prices fails to increase Despite Rebound In China’s Demand Huge US Stocks

Oil prices on Thursday failed to gain impetus as fears about slowing economic growth in the United States after inventories reached their highest level in months outweighed optimism about improving Chinese demand.
Brent crude futures had risen 1 cent to $85.10 per barrel, while US West Texas Intermediate (WTI) crude futures had dropped 3 cents to $78.44 per barrel.
Both benchmarks have increased by more than 6% so far this week.

“US crude oil inventories have continued to exceed expectations, which to some extent erodes the bullish sentiments brought from China’s demand recovery hopes,” said analysts from Haitong Futures.
Because of increased production, crude oil stocks in the United States increased last week to their highest level since June 2021, according to data released on Wednesday by the Energy Information Administration.

As demand remained poor, US gasoline and distillate stockpiles also increased last week.
More interest rate increases are anticipated, according to Federal Reserve officials, as the US central bank moves ahead with its efforts to curb inflation.
However, none of them was willing to speculate that January’s strong jobs report might force them to adopt a more aggressive monetary policy stance.

But as China, the world’s second-largest oil consumer, terminated more than three years of strict zero-COVID policy including city-wide lockdowns and mass testing in December, the likelihood of greater demand from China supported oil prices.
“Travel has increased sharply in China following the Lunar New Year holidays.
“We expect Chinese oil consumption to increase by around 1.0 million barrels a day this year, with strong growth emerging as early as late in Q1,” said Daniel Hynes and Soni Kumari, analysts from ANZ bank in a note on Thursday.

“Overall, this should push global demand up by 2.1 million barrels daily in 2023.”
In the meantime, BP Azerbaijan announced force majeure on February 7 following a significant earthquake that rocked Turkey and Syria early Monday.
The catastrophe had stopped Ceyhan’s operations and interfered with the supply of crude oil from Azerbaijan and Iraq.

Source: Allnews Nigeria

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