Oil continued to grow in U.S. trading session
2022.12.20 12:08
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Oil continued to grow in U.S. trading session
Budrigannews.com – On Tuesday saw an increase in oil prices, aided by plans by the Biden administration to replenish its petroleum reserve and a weaker U.S. dollar. However, gains were limited by uncertainty regarding the COVID outbreak in China.
By 09:30 ET (14:30 GMT), the contract was up 0.3 percent to $80.07 a barrel and the futures were up 0.6 percent to $75.80 a barrel.
After reducing the Strategic Petroleum Reserve to its lowest level in nearly 40 years, the United States government made the announcement late last week that it intends to replenish its strategic reserves by initially purchasing 3 million barrels of oil.
“The United States is indicating a course change that ought to put a floor under the oil market. Phil Flynn, senior energy analyst at PRICE Futures Group, stated, “This is a wake-up call to the market that has been intoxicated with SPR barrels. Instead of being a seller from the Strategic Petroleum Reserve, the U.S. is now a buyer.”
The current weakness of the U.S. dollar, weighed down by the earlier move by to take a tentative step toward tightening monetary policy for the first time in years, contributes to the optimism.
The fell 0.7% to 103.69, testing a six-month low, as the rose 3.3% against the dollar.
Oil is one of the commodities that foreign buyers can purchase for less if the U.S. currency is weaker.
Having said that, since China, the world’s second-largest economy and largest crude importer, relaxed pandemic restrictions, the market has primarily focused on the rise in COVID cases there.
The impact of the sudden loosening of strict COVID-19 containment measures was one of the factors cited by the World Bank in its Tuesday reduction of China’s growth outlook for this year and next.
The lender with its headquarters in Washington predicted that China’s economy would expand by 2.7 percent in 2022 and 4.3% in 2023, down from 2.8 percent and 4.5 percent, respectively, in its most recent report.
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Bloomberg’s data on the supply side suggest that Russia’s seaborne crude shipments collapsed during the first full week of the Group of Seven’s price cap, which could have a significant impact on global supply in the future.
The will release its estimate of U.S. crude oil stocks later in the session, and it is anticipated that this will show a slight decrease after the substantial increase the week before.
