Canada Global (Web News) Oil prices increased on Thursday as expectations of a strong recovery in gasoline consumption in top oil consumer China outweighed losses due to a strengthening dollar and a significant increase in U.S. crude inventory.
By 03:52 GMT, Brent crude futures had increased by 42 cents, or 0.5%, to $85.80 per barrel, while U.S. West Texas Intermediate (WTI) crude futures had increased by 48 cents, or 0.6%, to $79.07 per barrel.
The International Energy Agency (IEA) estimates that China will contribute 900,000 barrels per day (bpd) of the increase in oil demand, which will increase by 2 million barrels per day (bpd) in 2023, up 100,000 barrels per day from the forecast made last month to a record 101.9 million bpd.
According to the Paris-based organisation, China will account for more than half of the growth in global oil consumption in 2023 after lifting its COVID-19 restrictions. Read More
The U.S. dollar, which frequently moves against crude prices, rose and held onto the majority of those gains on Thursday as a result of encouraging U.S. retail sales numbers.
“OPEC and the IEA’s upbeat view on China were helpful. The enormous U.S. oil stock build was matched by the net upward thrust, but I don’t see much more headroom just yet “said Vandana Hari, the creator of Vanda Insights, a source of oil market information.
The Energy Information Administration (EIA) said that U.S. crude oil reserves increased by 16.3 million barrels last week to reach 471.4 million barrels, the largest level since June 2021. A data correction, which analysts claimed had a reduced effect on oil prices, was mostly to blame for the larger-than-expected build.
According to independent market researcher Sugandha Sachdeva, “Oil prices are projected to bounce in a narrow range, caught between the contrasting demand-supply dynamics.”
The narrative of strong demand revival from China and prospects of Russia-linked output cuts is driving up oil prices, Sachdeva continued. “While the steadily rising U.S. production and swelling inventories combined with a broad recovery in the U.S. dollar are acting as a headwind for oil prices, nonetheless,” she said.
