Oil climbs amid resurgent Chinese demand, Opec+ cuts
Brent crude futures for December settlement rose 46c, while WTI’s December contract was up 82c
19 October 2022 - 07:49
byReuters
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Singapore — Oil prices climbed on Wednesday, paring losses from the previous session, as investors jumped into more risky assets such as commodities amid gains in broader equity markets and on signs of renewed demand from top oil-importer China.
Brent crude futures for December settlement rose 46c, or 0.5%, to $90.49 a barrel by 4.55am GMT.
US West Texas Intermediate (WTI) crude for November delivery was at $83.69 a barrel, up 87c, or 1.1%. WTI’s front-month contract expires on Thursday and the more active December contract was at $82.89, up 82c, or 1.0%.
In the previous session, Brent fell by 1.7% and WTI fell by 3.1% to their lowest in two weeks on reports of US President Joe Biden’s plans to release more barrels from the Strategic Petroleum Reserve (SPR).
Oil prices were also buoyed by better risk sentiment, which was lifted by upbeat US corporate earnings and rising equity markets.
“The small rebound in oil prices is more likely due to more positive sentiment on the equity bourses and return of risk on trades than industry fundamentals,” said Suvro Sarkar, lead energy analyst at DBS Bank in Singapore.
Prices were also supported on signs of resurgent Chinese demand. Private mega-refiner Zhejiang Petrochemical Corp (ZPC) won additional crude-oil import quota for 2022 of 10-million tonnes and state-run ChemChina received a further quota of 4.28-million tonnes. That is equal to about 104-million barrels.
The pending EU ban on Russian crude and oil products and the output cut from the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as Opec+, of 2-million barrels per day also kept prices strong.
The Opec+ cut and EU embargo will squeeze supply in an already tight market. The EU’s sanctions on Russian crude and oil products will take effect in December and February 2023, respectively.
“With EU ban on Russian crude looming in early December, we would still be overall bullish than bearish on oil at current levels,” Sarkar said.
To plug the gap, President Biden will announce a plan later on Wednesday to sell off the remainder of his release from the Strategic Petroleum Reserve (SPR) and detail a strategy to refill the stockpile when prices drop, a senior administration official said.
In December, the administration plans to sell 15-million barrels of oil from its reserves, the final tranche of the 180-million-barrels release announced earlier this year, a senior US official said.
US crude-oil stockpiles fell by about 1.3-million barrels for the week ended October 14, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Gasoline inventories declined by about 2.2-million barrels, while distillate stockpiles dropped by 1.1-million, the sources said.
US crude inventories were expected to have increased for a second consecutive week, rising by 1.4-million barrels in the week to October 14, an extended Reuters poll showed on Tuesday.
Inventory data from the Energy Information Administration (EIA), the statistical arm of the US department of energy, is due at 10.30am (14.30pm GMT) on Wednesday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil climbs amid resurgent Chinese demand, Opec+ cuts
Brent crude futures for December settlement rose 46c, while WTI’s December contract was up 82c
Singapore — Oil prices climbed on Wednesday, paring losses from the previous session, as investors jumped into more risky assets such as commodities amid gains in broader equity markets and on signs of renewed demand from top oil-importer China.
Brent crude futures for December settlement rose 46c, or 0.5%, to $90.49 a barrel by 4.55am GMT.
US West Texas Intermediate (WTI) crude for November delivery was at $83.69 a barrel, up 87c, or 1.1%. WTI’s front-month contract expires on Thursday and the more active December contract was at $82.89, up 82c, or 1.0%.
In the previous session, Brent fell by 1.7% and WTI fell by 3.1% to their lowest in two weeks on reports of US President Joe Biden’s plans to release more barrels from the Strategic Petroleum Reserve (SPR).
Oil prices were also buoyed by better risk sentiment, which was lifted by upbeat US corporate earnings and rising equity markets.
“The small rebound in oil prices is more likely due to more positive sentiment on the equity bourses and return of risk on trades than industry fundamentals,” said Suvro Sarkar, lead energy analyst at DBS Bank in Singapore.
Prices were also supported on signs of resurgent Chinese demand. Private mega-refiner Zhejiang Petrochemical Corp (ZPC) won additional crude-oil import quota for 2022 of 10-million tonnes and state-run ChemChina received a further quota of 4.28-million tonnes. That is equal to about 104-million barrels.
The pending EU ban on Russian crude and oil products and the output cut from the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as Opec+, of 2-million barrels per day also kept prices strong.
The Opec+ cut and EU embargo will squeeze supply in an already tight market. The EU’s sanctions on Russian crude and oil products will take effect in December and February 2023, respectively.
“With EU ban on Russian crude looming in early December, we would still be overall bullish than bearish on oil at current levels,” Sarkar said.
To plug the gap, President Biden will announce a plan later on Wednesday to sell off the remainder of his release from the Strategic Petroleum Reserve (SPR) and detail a strategy to refill the stockpile when prices drop, a senior administration official said.
In December, the administration plans to sell 15-million barrels of oil from its reserves, the final tranche of the 180-million-barrels release announced earlier this year, a senior US official said.
US crude-oil stockpiles fell by about 1.3-million barrels for the week ended October 14, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Gasoline inventories declined by about 2.2-million barrels, while distillate stockpiles dropped by 1.1-million, the sources said.
US crude inventories were expected to have increased for a second consecutive week, rising by 1.4-million barrels in the week to October 14, an extended Reuters poll showed on Tuesday.
Inventory data from the Energy Information Administration (EIA), the statistical arm of the US department of energy, is due at 10.30am (14.30pm GMT) on Wednesday.
Reuters
Oil prices slip on lower fuel demand by China
Oil prices steady as dollar weakens
China’s move to help its economy pushes oil higher
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.