Oil prices rise in Asian Session OPEC observes
2023.01.25 04:42
Oil prices rise in Asian Session OPEC observes
By Tiffany Smith
Budrigannews.com – On Wednesday, concerns about a global recession were offset by optimism for a recovery in Chinese demand and expectations that major producers will maintain their current output policy.
By 0740 GMT, up 17 cents, or 0.2 percent, to $86.30 per barrel after losing 2.3 percent in the previous session. After falling by 1.8% on Tuesday, U.S. West Texas Intermediate (WTI) crude increased by 7 cents, or 0.1 percent, to $80.20.
According to Hiroyuki Kikukawa, general manager of research at Nissan (OTC):
“Expectations that China’s fuel demand will recover in the second half of the year are growing and are likely to support market sentiment.” Securities.
Bank of America (NYSE:) analysts: According to securities, the reopening of the Chinese economy following years of severe COVID restrictions could trigger a significant uptick in demand over the following 18 months.
As the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, are anticipated to maintain their output policy, volumes on the supply side ought to hold steady for the medium term.
Five OPEC+ sources stated on Tuesday that the producer group’s current oil output policy is likely to be approved by an OPEC+ panel when it meets next week. This is because concerns about inflation and the global economy outweigh hopes for increased demand from China.
On the basis of a weaker economic outlook, OPEC+ decided in October to reduce output by 2 million barrels per day from November to 2023.
However, a larger-than-expected increase in U.S. oil inventories that was reported after the market closed on Tuesday capped gains in oil prices.
Market sources citing American Petroleum Institute data claim that stocks increased by approximately 3.4 million barrels over the week ending January 20. In a preliminary Reuters poll conducted on Monday, that was three times the estimate of an approximately one million build.
However, Nissan’s Kikukawa anticipates that the construction will only last for a short period of time because “the supply disruptions from a cold snap in the United States a few weeks ago would only impact data in the next couple of weeks.”
Later on Wednesday, the Energy Information Administration of the United States will release official data.
In the coming weeks, Kikukawa anticipates that WTI will trade in a range of $75 to $85 a barrel.
For additional trading cues, markets are also keeping an eye on decisions made by central banks regarding interest rates.
Yeap Jun Rong, a market analyst at IG, wrote in a note, “It seems that the absence of hawkish Fed comments from the current blackout period has removed a key overhang for risk sentiments for the moment, providing some renewed traction back into growth.”
The analyst went on to say that investors are waiting to see if the Federal Reserve of the United States will “react to recent downside surprise in inflation and growth” when it meets next week.
