March Brent crude oil contracts are priced at $89.01 a barrel, data from the Intercontinental Exchange ICE show. This is 1.56% higher than the price at the close of trading on January 22. Crude Brent oil prices today exceeded the threshold of $89 for the first time since December 1, 2022.
Brent oil price forecast
The price of Brent was about $86.94 per barrel at its low on January 23. March WTI crude oil price rose 0.65% to $82.17 per barrel as of 19:58 Moscow time.
Oil has been rising in price for the third session in a row, said Oleg Syrovatkin, a leading analyst at the global research department of Otkritie Investments. Prices are supported by the prospects of strengthening of demand from China, concerns about possible reduction of supplies from Russia, and the weakening of the dollar against the currencies of G10.In this case the volume of trades is low today because of the celebration of the Lunar New Year in China, the expert points out.
Oil prices have shifted upward after a weak start at the beginning of 2023 as China, the largest consumer of fuel, announced the cancellation of the policy of “zero covid” and increased import quotas, causing analysts to expect an increase in demand, writes Bloomberg. Also, they expect prices to rise because of a possible softening of the U.S. Federal Reserve’s policy of raising interest rates.
Against this backdrop, Russian oil exports by sea declined last week, the agency wrote. Also, the $60 a barrel price ceiling on Russian oil, introduced last December, is still in effect. It is applied to Russian oil delivered by sea. Starting from February 5, it is planned to introduce a price ceiling on supplies of oil products of Russian origin, but its level has not been agreed upon yet.
Earlier, we reported that global demand for oil will reach a record level in 2023.
Anadolu: global oil demand will reach record levels in 2023
According to analysts of the International Energy Agency (IEA), the global oil demand will reach a record high of 101.72 million barrels per day this year, writes Anadolu observer Firdevs Yuksel.
He noted that in his monthly report on the IEA oil market, the forecast for Brent crude oil demand for 2023 was revised upward by 80,000 bpd compared to the previous forecast.
Analysts believe global oil demand will increase by 1.87 million bpd this year from last year to reach 101.72 million bpd. This number is seen as the highest level of all time.
It is reported that 50 percent of the anticipated increase in global oil demand will come from China on the back of the phasing out of anti-coke restrictions.
Analysts also forecast that jet fuel will still be the largest source of growth with an increase of about 840,000 barrels per day.
According to the IEA, global oil production last month decreased by 860 thousand barrels per day compared to the previous month, to 101.01 million barrels.
As for OPEC’s daily crude oil production last December, it fell by 40 thousand barrels to 29.019 million barrels compared to the previous month. At the same time, unconventional OPEC production other than crude oil was at 5.29 million barrels per day. Thus, OPEC’s daily oil production last month was 34.48 million barrels.
Non-OPEC production during the reporting period decreased by around 780,000 bpd to 66.52 million bpd compared to the previous month, Anadolu writes.
Earlier we reported that Bloomberg learned about the U.S. desire to maintain the level of the oil price ceiling.
Bloomberg has learned about US’s desire to maintain oil price ceiling
Poland, Estonia and other EU countries call for lowering the oil price ceiling from the current $60 a barrel, but the U.S. is against it. They are urging us to wait for restrictions against Russian oil products.
The administration of U.S. President Joe Biden opposes lowering the price ceiling on Russian oil, despite calls from some European countries to “further cut Moscow’s revenues,” Bloomberg reported, citing sources.
The $60-per-barrel price ceiling for Russian oil and the European embargo on Russian crude supplies by sea went into effect on December 5. As Bloomberg notes, Russian Urals oil is now trading below world prices and the established ceiling (according to the Ministry of Finance, the average price of Urals for the period from December 15 to January 14 was $46.82).
States that have set a price ceiling can change the level of the ceiling price at which it is allowed to buy oil from Russia every two months starting from mid-January. According to a Bloomberg source, the US wants to wait for the price ceiling on Russian oil products to work (February 5. the price ceiling has not yet been set) before revising the parameters of restrictions on crude oil. For the price ceiling to change, the consent of all G7 countries and the European Union is needed.
Poland, Estonia and some other EU members are calling for lowering the price ceiling. At the same time, other countries are afraid that this will hit their economies. According to Bloomberg, Germany insists that reviewing prices is carried out within a time frame that won’t mislead markets.
Experts at Finland’s Center for Energy and Clean Air Research CREA estimate Russia’s daily losses from the price ceiling at $172 million, which could rise to $280 million a day after Feb. 5.
The Russian authorities responded by banning supplies of oil and petroleum products to foreign nationals and companies if contracts “directly or indirectly provide for use of the price ceiling fixing mechanism.” Vice Prime Minister Alexander Novak earlier expressed confidence that the Western countries’ restrictions would destabilize the oil industry and that European and American consumers would have to pay for it first of all.
Earlier, we reported that oil prices ended with an increase for the second week in a row.
Oil is going up in price, ending the second week in a row. Why is oil going up in price?
Oil refiners in China have been increasing their purchases of oil hoping to boost energy consumption in the country following the lifting of quarantine restrictions, Bloomberg agency noted. Why is oil going up in price?
“Why is crude oil going up in price? Prices are rising amid continued optimism about China’s prospects,” said Charu Chanana, an analyst at Saxo Capital Markets in Singapore. – Signals that the incidence of COVID-19 in the country has peaked, reinforcing expectations for a more sustainable rise in demand.
U.S. Department of Energy data released the day before showed an unexpected and sharp increase in U.S. oil inventories. The index grew by 8.41 million barrels to 4483.02 million barrels while experts interviewed by Bloomberg expected a decrease of reserves by 3 million barrels. Gasoline inventories rose 3.48 million barrels, compared to an expected increase of 2.4 million barrels.
“The inventory data was significantly different from what the market was expecting,” said Tyche Capital Advisors expert Tariq Zahir. – Nevertheless, we expect prices to rise further given the opening of the Chinese economy, the situation in Ukraine and the fact that the U.S. government needs to replenish the strategic oil reserves.”
The value of March futures for Brent crude oil on London’s ICE Futures exchange at 8:29 Moscow time on Friday is $86.28 per barrel, which is $0.12 (0.14%) above the price at the close of the previous session. Those contracts rose by $1.18 (1.4%) to $86.16 a barrel at the close of trading on Thursday.
The price of WTI futures for February at electronic trades on the New York Mercantile Exchange (NYMEX) increased by that time by $0.17 (0.21%) up to $80.5 per barrel. By closing of previous trades, these contracts grew by $0.85 (1.1%) to $80.33 per barrel.
Earlier we reported that oil from Russia is mixed with other raw materials in Singapore and exported around the world.
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