Optimism on Oil is over
2022.12.29 00:16
Optimism on Oil is over
Budrigannews.com – On Thursday, rising COVID-19 cases in China dimmed hopes of a recovery in fuel demand for the world’s largest crude oil importer. This caused oil prices to fall.
By 0430 GMT, February futures were down 26 cents, or 0.3 percent, to $83.00 a barrel and $78.70 a barrel, respectively.
Even as China began to dismantle the COVID regime that was the most stringent in the world with lockdowns and testing, some nations enacted new travel regulations for Chinese visitors due to skepticism regarding official data and the scale of the most recent outbreak.
According to Jun Rong Yeap, a market strategist at IG, “the lack of clarity over the virus situation in China has prompted some new travel rules from various countries, which could serve as some dampener for previous optimism.”
He added, “There are chances for oil prices to rebound heading into 2023, but it will still boil down to the pace of China’s reopening and whether market participants have priced for growth risks as a trade-off to tighter central bank policies.”
As the Federal Reserve tries to limit price increases in a tight labor market, expectations of another U.S. interest rate increase also shook oil markets.
According to market sources citing American Petroleum Institute data, U.S. crude oil inventories decreased by about 1.3 million barrels in the week ending December 23, which was lower than anticipated.
Analysts had predicted a draw of 1.5 million barrels, which was lower than what actually happened. On Thursday, the government of the United States will publish its weekly statistics at 10:30 a.m. EST.
Likewise burdening costs, pipeline administrator TC Energy (NYSE:) said it was working to get the Keystone pipeline section that was shut down after a leak this month back up and running. However, this comes after a freeze in the Arctic shut down some oil refining facilities, halting crude supplies.
Oil refiners continued to expand their operations, and it is anticipated that some of that recovery will continue into January.
More Oil prices rise for the second week
However, Russia’s ban on exporting crude oil and oil products to countries that adhere to a Western price cap from February 1 for five months provided markets with some support.
Since spring, Germany has been working to replace Russian oil supplies and ensure supply security, so the ban, it claimed, “has no practical significance.”
