Oil prices steady amid China demand revival, high U.S. inventories

• Oil prices remained generally stable on Thursday.
• Crude oil stocks in the United States reached their highest level
• Crude futures in the United States declined 3 cents to $78.44 per barrel.

Oil prices remained generally stable on Thursday, as the potential of rising fuel demand in China as it reopens post-COVID limitations was countered by concerns that U.S. oil stocks reaching their highest level in months could signify declining demand in the world’s largest economy.

Brent crude prices rose 1 cent to $85.10 per barrel by 0446 GMT, while WTI crude futures in the United States declined 3 cents to $78.44 per barrel. This week, both benchmarks have risen more than 6%.

“U.S. crude oil … inventories have continued to exceed expectations, which to some extent erodes the bullish sentiments brought from China’s demand recovery hopes,” said analysts from Haitong Futures.

Crude oil stocks in the United States reached their highest level since June 2021 last week, thanks to increased production, according to the Energy Information Administration on Wednesday. Last week, gasoline and distillate stocks in the United States increased as demand remained weak.

According to Federal Reserve officials

More interest rate hikes are on the way, according to Federal Reserve officials on Wednesday, as the US central bank pushes forward with its efforts to lower inflation, while none were ready to indicate that January’s hot jobs report could force them back to a more aggressive monetary policy posture.

However, the anticipation of higher Chinese demand boosted oil prices as the world’s second-largest oil consumer halted a three-year rigorous zero-COVID policy requiring city-wide lockdowns and widespread testing in December.

“Travel has increased sharply in China following the Lunar New Year holidays. We expect Chinese oil consumption to increase by around 1.0 million barrels a day this year, with strong growth emerging as early as late in Q1,” said Daniel Hynes and Soni Kumari, analysts from ANZ bank in a note on Thursday.

“Overall, this should push global demand up by 2.1 million barrels a day in 2023.”

Meanwhile, BP Azerbaijan declared force majeure on Azeri crude shipments from the Turkish port of Ceyhan on Feb.7 after a massive earthquake struck Turkey and Syria early on Monday.

Also Read

Saudi Arabia boosts oil prices for march

The company's flagship Arab Light grade was raised to $2 a barrel...