Oil Rose 1% As Good US Economic News Came Out
On Thursday, oil prices increased by more than 1% due to anticipation that global demand will increase as China, the world’s largest oil importer, reopens its economy and favorable U.S. economic data.
Brent futures had risen $1.18, or 1.4%, to $87.30 per barrel, while U.S. West Texas Intermediate (WTI) crude had risen $1.12, or 1.4%, to $81.27. WTI was on course to close at its highest level since November 16 earlier in the day. But as of right now, Brent and WTI were both expected to close at their highest levels since January 23.
According to analysts at energy consultancy firm Ritterbusch and Associates, WTI is receiving some support from the liquidation of NYMEX (New York Mercantile Exchange) crack spreads.
This week, U.S. crack spreads, indicators of refining profit margins, increased to their highest levels for gasoline and the 3:2:1 since August.
The U.S. economy expanded faster than anticipated in the fourth quarter because of consumers’ strong spending habits. Still, momentum had dramatically slowed by year’s end due to increased interest rates weakening demand.
The Energy Information Administration (EIA) reported that U.S. crude stocks increased by 533,000 barrels to 448.5 million barrels in the week ending January 20.
Even while the EIA reports that oil stockpiles are at their highest level since June 2021, they fell short of predictions for a 1 million barrel increase. The impending OPEC+ JMMC conference and the EU embargo on refined goods are two other events that market participants are closely monitoring.
Reopening Oil In China Encourages Demand Optimism
This month, China has begun to relax the severe COVID-19 regulations, and Beijing has reopened its borders for the first time in three years. If China, the main source of global commodities demand, resumes business as usual, markets will tighten significantly, and conditions will be be ideal for commodity investor inflows.
According to OPEC+ sources, the ministerial panel meeting on February 1 will likely approve the oil producer group’s existing output levels. According to a Reuters poll of analysts, this year’s global economic growth should barely get beyond 2%. This will raise the possibility of a further deterioration that goes against the general market optimism that had been there from the year’s commencement.
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