Brent futures rise despite global economic headwinds

Front-month ICE Brent has increased by $1.31/bbl on the day, to $80.37/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Oil prices continue to seek respite from China’s reopening and expected surge in travel during the seven-day Spring Festival period beginning 22 January.

Stephen Innes, managing partner at SPI Asset Management, has called China’s reopening a key driver for oil prices. He adds that “the global growth dynamic via support from China reopening suggests that oil prices are stabilising without setting up a strong uptrend at this stage.”

Investment bank Goldman Sachs has predicted that "solid" growth in global demand of 2.7 million b/d will propel Brent to $105/bbl by the fourth quarter of this year, according to Reuters.

Downward pressure:

Going by an American Petroleum Institute (API) estimate, US crude inventories grew by a massive 14.9 million bbls in the week ending 6 January. Official Energy Information Administration (EIA) figures are due to come out at 15.30 GMT today.

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 the global crude oil inventories led by non-OPEC producers, including the US.

JPMorgan chief executive Jamie Dimon believes there is a 50% chance that US Federal Reserve will raise its benchmark interest rate to 5% from the current target range of 4.25-4.5%.

Sources familiar with Russian Ministry of Energy statistics have told Russian newspaper Vedomosti that Russia's oil production has been 0.1% higher so far in January than in December, while Russian oil exports have increased by 1.2% in early January to 634,400 b/d.

By Konica Bhatt

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