By Laura Sanicola
(RockedBuzz via Reuters) – Oil prices jumped more than $2 on Wednesday after OPEC and the International Energy Agency (IEA) forecast a rebound in demand next year and rate hikes in the US should ease along with slowing inflation.
Brent crude futures were up $1.88, or 2.3%, to $82.56 a barrel by 11:55 am EDT (1655 GMT), while US West Texas Intermediate (WTI) crude futures were increased by $1.82 to $77.21. Both contracts were up over $2 at the start of the session.
The Brent contract has reverted to a backward market structure where first month’s loading barrels are trading higher than subsequent deliveries, which indicates that oversupply concerns are easing.
The facility went into contango last week, with first-month deliveries cheaper than next-load deliveries.
Looking ahead to 2023, OPEC said it expects oil demand to grow by 2.25 million barrels per day (bpd) next year to 101.8 million barrels per day, with potential upside from China, the world’s leading importer.
The IEA, seeing Chinese oil demand recover next year after contracting by 400,000 bpd in 2022, raised its 2023 oil demand growth estimate to 1.7 million bpd to a total of 101.6 million barrels per day.
Road and air traffic in China have rebounded sharply, data suggest.
“The stance remains supportive of triple-digit prices…Recent volatility is a good entry point ahead. Balances may be looser next quarter, but by Q2 a fresh rally in prices is on the way. prices,” said Bernstein analyst Oswald Clint.
The US consumer price index climbed 0.1% in November, following a 0.4% rise the previous month, fueling hopes of a slowdown in interest rate hikes, which in turn could support oil prices.
US Federal Reserve policymakers are expected to hike rates by 50 basis points later Wednesday, slowing from the 75 basis points pace they have been sticking to since June.
Oil prices were supported by a leak and outage at TC Energy Corp’s Keystone Pipeline, which ships 620,000 barrels a day of Canadian crude to the United States.
Officials said the cleanup will take at least several weeks.
Sending bearish signals, U.S. crude stockpiles rose more than 10 million barrels last week, the most since March 2021, supported by releases from the Strategic Petroleum Reserve and reduced refinery activity. [EIA/S]
(Additional reporting by Shadia Nasralla in London, Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by Jason Neely and Kirsten Donovan)
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