Oil prices rose slightly in early Asian trading on Wednesday, as markets balanced concerns about demand growth in China, the world’s largest crude importer, with indications of tight supplies in light of production cuts by major producers.
Prices also received support from the decline in the US dollar, which boosted demand for buyers paying in other currencies.
Price action
Brent crude futures rose 8 cents to $82.12 a barrel by 0333 GMT. US West Texas Intermediate crude futures increased 12 cents to $78.27 a barrel.
China’s targeted economic growth rate for 2024 of about five percent lacks major stimulus plans to support the country’s faltering economy, which has increased concerns that demand growth in China may be delayed this year. Beijing announced this goal yesterday, Tuesday.
The “risk off” trend that characterized recent trading was confirmed by the decline in Treasury yields, which also led to pressure on oil prices. Gold prices hit a record high yesterday, Tuesday, in light of increasing bets on a cut in US interest rates in June.
However, oil prices received support from the decline in the US dollar and the announcement on Sunday that the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, extended production cuts of 2.2 million barrels per day until the end of the second quarter.
The extension has led to some scarcity in supply, especially in Asian markets, in addition to the disruption of oil tanker movements as a result of the Red Sea attacks launched by the Yemeni Houthi group.
“Crude oil futures are declining amid a risk-off trend in the markets. This comes despite continued signs of tightness in the physical market,” Daniel Haynes, senior commodities strategist at ANZ Bank, said in a note on Wednesday, adding that OPEC+ cuts “It’s slowly making its way through the market.”
Signs of scarcity were clear when Saudi Arabia, the world’s largest oil exporter, announced on Wednesday a slight rise in April crude oil sales prices to Asia, its largest market.
The American Petroleum Institute report showed that US crude inventories rose by 423,000 barrels in the week ending March 1, which is much less than the increase of 2.1 million barrels expected by analysts in a Reuters poll.
Petroleum Institute data showed that gasoline stocks fell by 2.8 million barrels and distillate stocks fell by 1.8 million barrels.
Official data from the US Energy Information Administration is scheduled to be released on Wednesday at 1530 GMT. If the EIA announces an increase in crude oil inventories, this will be the sixth week in a row that the country’s oil inventories have risen.
Energy expert: Extending the oil production cut prevents uncertainty in the markets
2024-03-06 03:47:30
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