WTI crude futures hit near their highest level since early December on Wednesday, closing at $81, as optimism about a rebound in demand from China following its rapid abandonment of zero COVID policy outweighed concerns. about a global economic recession.
At the World Economic Forum, a senior Chinese economic official predicted that as COVID infections have peaked this year, the world’s second-largest economy and top oil importer will likely return to its growth trajectory prior to the pandemic.
On the supply side, investors remained concerned about the anticipated effects of the most recent Western sanctions imposed in response to the conflict in Ukraine on Russian flows. Signs of instability elsewhere dampen the rebound in oil consumption in China. OPEC Secretary General Haitian Al-Ghais said he is “cautiously optimistic” about the outlook for the world economy.
Investors anticipate the International Energy Agency (IEA) report on the monthly market outlook later on Wednesday. Expectations that China’s tough COVID-19 regulations will be relaxed will result in a rebound in gasoline consumption in the world’s biggest oil importer, sending oil prices higher on Wednesday, extending gains from the previous session. .
US oil production should rise to a record in February
Following a 1.7% gain in the previous session, Brent crude futures rose 52 cents, or 0.6%, to $86.44 a barrel. After rising 0.4% on Tuesday, U.S. West Texas Intermediate (WTI) crude futures rose 55 cents, or 0.7%, to $80.73 a barrel.
However, OPEC maintained its estimate of 2.22 million bpd for global demand growth to 2023. According to Toshitaka Tazawa. Who is an analyst at Fujitomi Securities Co Ltd., “the growing anticipation that China’s fuel demand will increase. After a recent change in its COVID-19 policy, it offered support to oil prices.
He said market sentiment was OPEC’s bullish outlook on demand from China, further encouraging the forecast for a bullish tone this week. Oil in dollars is less expensive for holders of other currencies, which stimulates purchases.
The price of oil rose at its slowest pace in more than a year, with quantities falling due to lower well productivity and production budget cuts triggered by inflation. The EIA forecast US crude oil production in the largest US shale oil region. According to him, the Permian in Texas and New Mexico should increase around 30,400 BPD to 5.64 million BPD in February.
The EIA predicted that oil production in the Bakken region of North Dakota and Montana would increase by 20,000 BPD to 1.23 million next month, the highest level since November 2020.
