Brent futures buoyed by optimism about demand recovery

Front-month ICE Brent has climbed by $2.56/bbl on the day, to $82.93/bbl at 09.00 GMT.

PHOTO: The Kremlin in Moscow serves as the official residence of the President of the Russian Federation. Getty Images

Upward pressure:

Brent has drawn support from signs of improved Chinese demand. Oil market optimism has been boosted by the Chinese government's increased import quotas and the expected surge in travel for Lunar New Year celebrations.

"Energy traders should get used to seeing oil prices head higher. Oil demand is coming back, and expectations are high that China’s demand is about to skyrocket," says Edward Moya, senior analyst at OANDA.

Brent has also been pushed higher by mounting concerns over supply tightness, exacerbated by the intensifying oil war between Russia and the West.

Kremlin spokesman Dmitry Peskov has said that Russia will safeguard its interests following reports that G7 nations intend to set two distinct price caps on refined Russian oil products from February. Russian state-owned news agency TASS has quoted Peskov saying, "measures like these will meet resistance. The market allows this to be done."

Downward pressure:

US Energy Information Administration (EIA) data shows that commercial US crude inventories gained 18.96 million bbls to 439.60 million bbls in the week ending 6 January, the biggest build since February 2021.

Meanwhile, the EIA has lowered its Brent price forecast for this year to $83/bbl, down from $92/bbl earlier, mainly on the back of a rise in global crude oil inventories led by non-OPEC producers, including the US.

By Konica Bhatt

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