Singapore, Feb. 20 (BNA): Oil prices rose today, Monday, amid optimism about a recovery in demand in China, concerns that a lack of investment will hamper future oil supplies, and with major producers continuing to limit production.
Brent crude was up 47 cents, or 0.6 percent, at $83.47 a barrel by 0445 GMT. US West Texas Intermediate crude for March, which expires on Tuesday, was $76.78 a barrel, up 44 cents, or 0.6%. The most active April contract rose 0.5% to $76.90.
The two benchmarks settled down $2 a barrel on Friday, and closed down about 4% last week after the United States reported higher crude and gasoline inventories, Reuters reported.
Baden-Moore, Head of Commodities Research at National Australia Bank, said: “Brent and WTI prices are up slightly this morning after selling off on recent Fed hawkish comments, following stronger CPI and PPI data. expected in the United States.
While last week’s announcement that the US will sell 26 million barrels of crude oil from its Strategic Petroleum Reserves adds some downward pressure on the market, global supply appears to be “flat-down” versus the prior corresponding period after factoring in production cuts by Russia. and OPEC+, Moore added.
He was referring to an agreement by the Organization of the Petroleum Exporting Countries (OPEC) and allies of the group known as OPEC + last October to cut oil production targets by two million barrels per day until the end of 2023.
Russia plans to cut oil production by 500,000 barrels per day, or about five percent of production, in March after the West imposed price ceilings on Russian oil and petroleum products.
“In this context, we continue to see a reopening of China, recovery in China and global demand for aircraft to drive upside risk,” Moore said. China is the largest importer of crude oil in the world.
Analysts expect China’s oil imports to reach an all-time high in 2023 due to increased demand for transportation fuels and as new refineries come online.
China, along with India, has become a major buyer of Russian crude following the EU ban.
At the same time, future oil supply shortages are likely to push prices towards $100 a barrel by the end of the year, analysts with Goldman Sachs said in a note dated February 19.
Prices will rise, they wrote, “as the market returns to deficit with lack of investment, shale constraints, and OPEC discipline ensuring supply does not meet demand.”
Rial