© Reuters.
Investing.com – rallied during current trading moments today, Monday, strongly on the impact of the continued closure of the Keystone pipeline in North America, and expectations of the return of Chinese demand after the easing of coronavirus restrictions and the calm pace of raising the next period, which made a number of international institutions and banks expect an increase Prices for the next period, but some of them have a different opinion.
Bank of America said the benchmark price could rise rapidly to above the $90 a barrel level, supported by the halt and return of Chinese demand.
ING bank economists also expect the price to rise to around $104 a barrel, on average, within the next year.
On the other hand, analysts at Citigroup (NYSE: ) cut their average forecast for next year crude oil by 10% to $80 a barrel.
Prices now
The price of U.S. Texas crude oil rose during these trading moments on Monday by 4% a barrel to levels near $74 a barrel.
The benchmark jumped during trading on Monday by 3% to levels near $78.4 a barrel.
Bank of America (NYSE:) Outlook.
Bank of America said in a recent research note that Brent crude could average $100 a barrel next year, up from current levels near $76.
The bank justified expectations of a recovery in Chinese oil demand with the reopening of the economy and a drop in Russian supplies of crude oil by about one million barrels a day due to European sanctions.
He also referred to the decision by the “OPEC+” coalition to cut oil production by two million barrels a day, which could provide support to crude oil prices.
But Bank of America indicated that demand and price expectations depend largely on a recovery in demand growth from China and India, explaining that any delay in reopening Asian economies could significantly affect price expectations.
ING Bank forecasts
ING Bank economists had expected the price to rise to around $104 a barrel on average within the next year.
Experts have concluded that Russian oil supply will experience a massive decrease early next year, estimated at 1.8 million barrels per day year-on-year.
Moreover, US oil supplies will not be able to close that gap, in conjunction with the continuation of OPEC+ supply cuts, which have bolstered experts’ expectations regarding the sharp tightening the oil market will see throughout on 2023.
Keystone line
News of the incident at the closure of Trans Canada’s Keystone pipeline in the US led to a brief rally on Thursday, but crude prices then fell as the market considered the closure short, but with the lockdown still in place i prices are now significantly higher.
More than 14,000 barrels of crude oil have poured into a Kansas creek, making it one of the largest crude oil spills in the United States in nearly a decade.
RBC Capital analyst Robert Cowan said previous outages caused by leaks were usually resolved in about two weeks, although the most recent outage may be longer, given that it involved a leak in a water resource.
oil in 2022
Chinese demand has declined
China is the world’s largest crude oil importer and second largest oil consumer after the United States, and the government’s tough intervention to contain the Corona virus outbreak during 2022 has led to a sharp decline in industrial and economic output as well as travel demand.
Analysts estimate that China’s measures have reduced oil demand by 30-40% in the country.
Nor did the start of winter in Europe see a sharp drop in temperature, which limited demand for various fuels, including distillates such as those used for power generation and home heating.
Economic activity has generally declined around the world, particularly in China and also in the United States.
interest and dollars
To combat rising inflation, central banks around the world have taken a series of decisions to raise interest rates to calm the economy and the job market.
Interest rate hikes have led to a rise in the value of the dollar, which has put pressure on oil prices, as a rise makes the commodity in which it is denominated more expensive for holders of other currencies.
Procurement concerns
In October, “OPEC +”, which includes the Organization of the Petroleum Exporting Countries “OPEC” and allies outside it, including Russia, agreed to reduce the target production by two million barrels per day, equal to the 2% of global demand, from November through the end of 2023 with the aim of ensuring stability in oil markets, after data indicated a weak global economic outlook.
Interestingly, about half of OPEC’s reduction is only on paper, as the organization has produced less than the target amount in the recent period and, at the same time, production has increased in the United States.
Domestic production is growing slowly but recently reached 12.2 million barrels per day, the highest level since the first wave of the Corona epidemic in March 2020.
Among the reasons that led to the price increase were fears that the series of sanctions imposed by European countries and the United States on Russia would affect its supplies.
While Russian production has indeed declined, it has not happened as quickly as might have been expected.
The Group of Seven countries and Australia this week imposed a cap of $60 a barrel on seaborne Russian crude to undermine Russia’s ability to finance its war in Ukraine.
However, Russian oil is already trading at a discount to this price, meaning this move is unlikely to lead to market turmoil.
