On August 12, 2022, a view of the Chao Xing ship at the crude oil terminal Kozmino on the Nakhodka Bay shoreline in the port city of Nakhodka, Russia, is shown in a file photo.
SG – Singapore
Oil prices remained largely unchanged on Thursday as concerns that inventories reaching their highest levels in months may indicate decreasing demand in the top consumer of oil outweighed the likelihood of rising gasoline demand in China as it reopens following COVID limits.
By 0446 GMT, futures were up 1 cent to $85.10 per barrel, while U.S. West Texas Intermediate (WTI) oil prices were down 3 cents to $78.44.
According to experts at Haitong Futures, “U.S. crude oil… stocks have continued to surpass forecasts, which to some part erodes the positive feelings spurred on by China’s demand recovery optimism.”
Because of increased production, crude oil stockpiles in the United States increased last week to their highest level since June 2021, according to data released on Wednesday by the Energy Information Administration. As demand remained poor, U.S. gasoline and distillate stockpiles also increased last week.
As the U.S. central bank pushes forward with its efforts to reduce inflation, Federal Reserve officials said on Wednesday that additional interest rate increases are anticipated. However, none were prepared to say that January’s hot jobs report might prompt them to return to a more aggressive monetary policy stance.
But when China, the world’s second-largest oil user, terminated more than three years of strict zero-COVID policy including city-wide lockdowns and mass testing in December, the likelihood of more demand from China supported oil prices.
According to Daniel Hynes and Soni Kumari, analysts at ANZ bank, “we estimate Chinese oil consumption to climb by roughly 1.0 million barrels a day this year, with robust growth starting as early as late in Q1.”
“In general, this should increase world demand in 2023 by 2.1 million barrels per day.”
In the meanwhile, BP (NYSE:) Azerbaijan announced force majeure on February 7 following a powerful earthquake that rocked Turkey and Syria early on Monday. The catastrophe had stopped Ceyhan’s operations and interfered with the supply of crude oil from Azerbaijan and Iraq.