Strong demand numbers support optimism in the oil markets.. Prices are near the highest level in 7 weeks

Strong demand numbers support optimism in the oil markets.. Prices are near the highest level in 7 weeks
Strong demand numbers support optimism in the oil markets.. Prices are near the highest level in 7 weeks

Strong demand figures from China supported optimism in oil markets and pushed oil prices near their highest levels in seven weeks, while the market remains on alert, as the European Union’s ban on imports of oil products from Russia is due to begin within days, and on Despite the wide contraction in supplies of Russian products, official statistics indicate that Russian diesel shipments to the European Union are still strong, at about 450 thousand barrels per day.
Oil analysts say – quoting international reports – that the market is awaiting a meeting of “OPEC +” ministers early next month within the framework of the periodic meetings of the Production Monitoring Committee, pointing out that most of the expectations are in the interest of the ministers’ recommendation to maintain oil production levels unchanged amid a temporary recovery in oil prices. global demand.
Analysts explained that a sharp rise in diesel prices appears almost inevitable, as medium distillate inventories in OECD countries remain about 30 million barrels below the five-year average, and US diesel production is hampered by stagnant refining capacity.
Analysts pointed to the concern of the oil market about the start of strikes in three French refineries, which reduced supplies of middle distillates and gasoline.
Martin Graf, director of the Austrian energy company Energy Styremark, told Al-Eqtisadiah that positive sentiment returned to the market with the start of the Lunar New Year in China, which supported the increase in demand, and the renewed debate in the United States about renewing the strategic oil reserves, along with other difficulties. Such as weak US refining capacity, coupled with upcoming heavy maintenance weeks that weaken demand broadly.
He explained that the price ceiling imposed by Western countries on Russian oil sales faces practical difficulties in application, which prompted the United States to adopt more flexible positions towards this ceiling, as US Treasury Secretary Janet Yellen said that the price cap coalition is working to set maximum limits for products. Russian oil, and it is supposed to start on February 5, but the markets are complex and there is a chance that things will not go as planned.
For his part, Goran Geras, assistant director of ZAF Bank in Croatia, says: Russian oil exports are rising despite working with the western price ceiling, as shipments of Russian crude oil from Baltic ports are expected to increase by 50 percent this month compared to January. The first (December) to reach 1.7 million barrels per day, excluding fears of falling crude oil prices or shrinking production, as the majority of Russian oil shipments are destined for India.
He pointed out that the growth of US shale oil production is witnessing a state of decline and a calm pace, as the latest report on energy expectations in the short term issued by the US Energy Information Administration expects that in the current year, the main Permian field for shale production will still represent 80 percent of the growth in oil production. Crude in the United States of 540 thousand barrels per day, however, the annual increase of the shale basin is expected to shrink to 270 thousand barrels per day in 2024.
In turn, Sultan Corali, an Albanian analyst and energy specialist, says: The relatively warm weather in Europe and the indecisiveness of the mechanism for applying sanctions on Russian energy allowed a decline in energy prices and a decline in global inflation expectations very quickly, which reinforced hopes that the inflation rate in the United States and Europe would return to normal. his former self by next summer.
He added that the decline in inflation expectations, in turn, allowed an increase in stock and bond prices, but with the advent of the second and third quarters of this year, it is likely that the reopening of the Chinese economy could unleash a large wave of pent-up demand over the next 18 months – according to estimates by the “Bova Global Research” company. -.
For his part, Andrei Yaniev, a Bulgarian analyst and researcher in energy affairs, says that the ministers of the “OPEC +” alliance will, at a meeting in early February, review production levels after agreeing on large cuts late last year to maintain the balance of global crude oil markets.
He stated that the “OPEC +” alliance is intensively following the recovery of consumption in China and the impact of Western sanctions on Russian supplies, pointing to the expectation of the “Goldman Sachs” international bank that the “OPEC +” alliance will return to increasing production in the second half of this year when the acceleration of demand leads to to tighten the market.
With regard to prices, oil prices fell yesterday, adding slightly to their losses in the previous session, as the increase in US crude stocks and fears of a global recession balanced optimism about the recovery of demand in China.
Crude oil prices have risen this year amid China ending anti-Corona virus restrictions and hopes that the Federal Reserve (the US central bank) will stop raising interest rates soon.
However, some analysts said, the speed of actual demand recovery in China appears uncertain.
“Whether or not oil prices return to an upward trend will depend on how quickly demand for crude oil in China recovers this quarter,” said Stephen Brennock of oil brokerage PVM.
“In the meantime, the focus is shifting to the state of US oil inventories,” he added.
Brent crude fell six cents to $86.07 a barrel by 08:20 GMT, after falling 2.3 percent in the previous session.
US West Texas Intermediate crude also fell 40 cents, or 0.5 percent, to $79.73, after falling 1.8 percent on Tuesday.
The decline in prices was affected by a report issued about the rise in US crude stocks by about 3.4 million barrels in the week ending January 20, according to market sources citing data from the American Petroleum Institute.
Concerns about an economic slowdown also affected oil prices.
Data showed US business activity contracted in January for the seventh consecutive month.
Official data on inventories will be released from the US Energy Information Administration at 15:30 GMT.
It is assumed that the oil supply will remain stable in the medium term, as it is expected that the Organization of the Petroleum Exporting Countries “OPEC” and its allies in “OPEC +” will maintain their production quotas.
According to “Reuters”, five sources in “OPEC +” said that it is likely that the “OPEC +” committee will approve the current oil production policy for the group of producers when it meets next week, as there is a balance between hopes for an increase in Chinese demand and concerns about inflation and the global economy. .
On the other hand, the “OPEC” basket of crude declined, recording a price of $84.89 a barrel on Tuesday, compared to $85.35 a barrel the previous day.
The daily report of the Organization of the Petroleum Exporting Countries (OPEC) said that the price of the basket, which includes average prices of 13 crudes produced by member states, achieved the first decline after two consecutive increases, and that the basket gained about $1 compared to the same day last week, when it recorded $83.30 a barrel. .



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