Oil Prices Increase as China Boosts Crude Buying
Oil prices edged higher in the global commodities market amid expectations of stronger spot crude purchases in China and a stronger physical market in the US, ING said in a Tuesday note.
Brent crude surged by 28 basis points to settle at $81.90 per barrel from $81.67 a barrel in the previous trading session. The American benchmark West Texas Intermediate (WTI) traded at $77.80 per barrel at the same time, for a 0.28% gain after the previous session closed at $77.58 per barrel.
Analysts said there are suggestions that China has been buying crude cargoes at an accelerated pace since the mid-February holiday, while also increasing its term supplies from Saudi Arabia in March.
The increased purchase from the country could also be attributed to the advance buying made ahead of the maintenance work when refiners typically reduce imports. Recent local media reports suggest that Russia has approved a six-month ban on the exports of gasoline starting from 1 March 2024.
However, the ban does not apply to gasoline exports to the Eurasian Economic Union, Mongolia and Uzbekistan. The move came as the domestic market will soon see increased demand due to spring field work, repairs at refineries and summer holidays.
The announcement is not expected to have a large impact on the global gasoline market as Russia consumes most of the gasoline it produces, according to ING.
The weak US dollar also supports the latest rally in the global commodities market. The US dollar index, which measures the dollar’s value against other currencies, fell 0.08% to 103.74.
The US dollar’s decline supported trade by lowering oil prices for holders of other currencies, causing an increase in oil prices. Analysts are awaiting the release of economic data in the US along with speeches from US Federal Reserve (Fed) officials this week for cues on the Fed’s interest rate policy.
In March, the Fed is anticipated to maintain the current policy rate. Nonetheless, there is a 60% probability that the first interest rate cut will be made in June and a 16% chance that it will happen in May.
Data released on Monday revealed that new home sales in the country increased by 1.5% on a monthly basis to 661,000 in January, raising hopes of positive economic activity, although the numbers remained below market expectations.
There are concerns that the conflicts in the Red Sea would negatively affect global oil supply.Iran-backed Houthis in Yemen announced over the weekend that US and British warplanes bombed the Shamir region of the city of Taiz in the southwest of the country.
A statement by the US Department of Defense revealed that the US and the UK, with the support of their allies, hit 18 Houthi targets in eight different places in Yemen.
The Houthis announced Monday that they targeted an American oil tanker in the Gulf of Aden and a number of American warships in the Red Sea. #Oil Prices Increase as China Boosts Crude Buying
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