Oil rises on Chinese demand expectations and supply concerns By Reuters
© Reuters. FILE PHOTO: An aerial view shows the Vladimir Arseniev tanker at the Kozmino oil depot on the shores of Nakhodka Bay near the port city of Nakhodka, Russia, August 12, 2022. REUTERS/Tatiana Meel
Emily Chow
SINGAPORE (Reuters) – Oil prices rose on Monday amid optimism about a recovery in demand in China, fears that insufficient investment will limit oil supplies going forward, and major producers maintain production restrictions.
rose 47 cents, or 0.6%, to $83.47 a barrel by 04:45 GMT. March West Texas Intermediate (WTI) oil, which expires on Tuesday, was $76.78 a barrel, up 44 cents, or 0.6% higher. The more active April contract rose 0.5% to $76.90.
On Friday, the indices fell by $2 a barrel and closed down by about 4% last week after the US reported a rise in oil and gasoline inventories.
“Brent and WTI crude prices edged up slightly this morning after a sell-off on the back of the Fed’s recent hawkish comment following stronger-than-expected US CPI and CPI data,” said Baden Moore, head of commodities research. goods at the National Bank of Australia (OTC:).
While last week’s announcement that the US will sell 26 million barrels of its strategic oil reserves puts some downward pressure on the market, global supplies are likely to remain unchanged from the previous corresponding period, with output cuts. Russia and OPEC+. Moore added.
He was referring to an agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC+, last October to cut oil production targets by 2 million barrels per day (bpd) by the end of 2023. .
Russia plans to cut oil production by 500,000 bpd, or about 5% of production, in March after the West imposed price caps on Russian oil and oil products.
“In this context, we continue to see a reopening of China, as well as a recovery in China and global aircraft demand, which raises the risk of higher prices,” Moore said. China is the world’s largest importer of crude oil.
Analysts expect China’s oil imports to reach a record high in 2023 due to increased demand for transportation fuels and new refineries coming online.
China, along with India, has become the largest buyer of Russian oil since the European Union’s embargo.
At the same time, future oil shortages are likely to push prices towards $100 a barrel by the end of the year, analysts at Goldman Sachs (NYSE:) said in a Feb. 19 note.
Prices will rise “as the market returns to a deficit due to underinvestment, restrictions on the shale industry and OPEC discipline to ensure supply does not match demand,” they wrote.
