Brent moves above $85/bbl amid Chinese demand optimism
Front-month ICE Brent has gained by $0.74/bbl on the day, to $85.44/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Chinese oil demand is expected to increase in support of prices, according to ANZ commodity strategist Daniel Hynes. He says the demand growth has been underpinned by recovering road traffic levels and domestic flights. The country’s main refineries could bring runs up to pre-lockdown levels in the first quarter this year, Bloomberg reports.
The Energy Information Administration (EIA) estimates that global oil consumption will increase from 99.4 million b/d in 2022 to 102.3 million in 2023, primarily driven by a rebound in Chinese demand. However, uncertainty around global economic conditions and China’s zero-Covid policy could hinder further demand growth.
Crude oil flows to Turkey’s 1 million b/d Ceyhan oil export terminal remain partly halted after a massive earthquake hit the region. BP has declared a force majeure on loadings of Azeri crude from Ceyhan as crude flows from Azerbaijan’s Baku, via Georgia’s Tbilisi to Ceyhan remain halted.
Downward pressure:
Commercial US crude oil stocks increased by 2.42 million bbls to a 20-month high of 455.11 million bbls in the week to 2 February, according to the EIA. The stock build ran counter to the American Petroleum Institute's (API) earlier projection of a 2.18 million-bbl draw.
US gasoline stocks gained for a fifth consecutive week, in a sign of weaker demand.
US Federal Reserve officials have said more interest rate rises are on the cards as the US central bank presses forward with its efforts to cool inflation, Reuter reports. It invoked concerns among investors about a possible drag on demand.
By Erik Hoffmann and Nitin Sharma
Please get in touch with comments or additional info to news@engine.online
