Crude Oil Prices Surges As Rising Supplies And Chinese Demand Hopes


New York: oil prices slightly rose as signs of ample supply, such as rising crude futures inventories in the United States, outweighed growing expectations for increased demand following an increase in manufacturing in China, the largest crude importer.

Brent oil  prices,  crude futures ended the day at US$84.31 a barrel, up 86 cents, or 1 percent. US West Texas Intermediate crude (WTI) closed at US$77.69, up 64 cents, or 0.8%.

Government data showed that US crude inventories increased by 1.2 million barrels last week to 480.2 million barrels, surpassing analyst expectations of a 457,000-barrel increase. This marked the highest level since May 2021. It was the tenth weekly increase in a row.

According to Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, “US crude supply trends could further limit additional price upside” until “this supply overhang is able to narrow amidst some decline in Cushing.” The major hub for US crude oil storage is Cushing, Oklahoma.

According to UBS analyst Giovanni Staunovo, a rise in US crude exports to a record high of 5.6 million barrels per day contributed to a wider discount of WTI to Brent last week, resulting in a smaller build than in previous weeks.

The Kommersant business daily reported that Russia’s oil production reached the pre-sanctions level for the first time in February, providing additional evidence of ample supply. A Reuters survey revealed that production at the Organization of the Petroleum Exporting Countries also increased in February.

Stephen Brennock, an oil broker with PVM, stated, “China’s economy is rebounding now, and this can only be a positive driver for oil prices.” He added that the resilient supply from Russia is stifling buying interest.

Refinitiv Eikon data and trading sources told Reuters that Lukoil, Russia’s second-largest oil producer, has set up ship-to-ship (STS) loadings of Urals oil near the western port of Kaliningrad.

Also Read :Iran And Russia Will Start Oil-Product Swap As Ties Deepen Under Sanctions

In January, STS loadings of Russian Urals crude reached a record high in the Mediterranean as traders moved cargoes onto larger vessels to reduce costs for long-distance shipments to Asia.

China’s manufacturing activity expanded at the fastest rate in more than a decade in February, according to an official index, fueling expectations for an increase in oil demand.

A private sector survey also showed activity rising for the first time in seven months, despite the official manufacturing purchasing managers’ index (PMI) rising to 52.6 from 50.1 in January.

According to IG market strategist Yeap Jun Rong, “Another round of upside surprise in China’s PMI further provides conviction of a stronger than expected recovery, which supports a more optimistic outlook for oil demand.”

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