Oil Prices Steady as China Reopens Economy
Oil prices steady on Thursday over a positive outlook as China ends covid-19 restrictions following a higher-than-expected increase in oil stockpiles in the US, the world’s largest oil consumer.
China is reopening its economy after the end of strict COVID-19 controls, boosting optimism that demand for fuel will grow in 2023. International benchmark Brent crude traded at $82.75 per barrel, representing a 0.10% increase from the closing price of $82.67 a barrel in the previous trading session.
The American benchmark West Texas Intermediate traded at $77.48 per barrel at the same time, a 0.09% loss after the previous session closed at $77.41 a barrel. US commercial crude oil inventories increased by around 19 million barrels to 439.6 million barrels, according to the Energy Information Administration (EIA) data.
Market expectation was a decline of around 2.4 million barrels. An increase in crude stocks signalled falling crude demand in the US and weighed on oil prices.
Renewed hopes of a demand increase in China, the world’s biggest oil importer, supported upward price movements while growing fears about further interest rate hikes in the US limited further price upticks.
US commercial crude oil inventories increased by 4.5% during the week ending Jan. 6, according to data released by the Energy Information Administration (EIA) late Thursday. Inventories rose by around 19 million barrels to 439.6 million barrels, against the market expectation of a decline of around 2.4 million barrels.
However, strategic petroleum reserves, excluded from commercial crude stocks, fell by 800,000 barrels to 371.6 million barrels last week, the data revealed. Gasoline inventories increased by 4.1 million barrels to 226.8 million barrels over the same period.
US Crude Production Data
EIA data showed that US crude oil imports increased by 637,000 barrels per day (bpd) to around 6.35 million bpd during the week ending Jan. 6, while crude oil exports decreased by 2.07 million bpd to about 2.14 million bpd.
US crude oil production, meanwhile, rose by 95,000 bpd to approximately 12.65 million bpd over the same period.
In the January Short-Term Energy Outlook (STEO), the EIA forecasted that crude oil output in the US would average 12.41 million bpd in 2023, up from 11.86 million bpd in 2022. Crude oil output in the country in 2024 is forecast to reach 12.81 million bpd.
