- Oil continues to trade at its highest since early December on hopes that Chinese demand will rebound
- Feb ’23 gains nearly $1.50 this morning to trade around $82/Bbl
- IEA expressed optimism regarding Chinese demand recovery in its January oil report
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) continued weakening and fell to its lowest since June 2022
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- IEA sees global oil demand to hit a record high in 2023 as China reopens (IEA, BBG)
- IEA, in its January monthly report, revised up its global demand growth forecasts by 0.2 MMBbl/d to 1.9 MMBbl/d for 2023, with global oil demand expected to reach 101.7 MMBbl/d
- “This year could see oil demand rise by 1.9 MMBbl/d to reach 101.7 MMBbl/d, the highest ever, tightening the balances as Russian supply slows under the full impact of sanctions. China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain,” said IEA in its monthly report
- However, the group said that the global oil markets are set to see a surplus of roughly 1 MMBbl/d in 1Q2023 before tightening in 2Q2023 as China reopens
- Russian oil exports fell by just 0.2 MMBbl/d in December despite the EU embargo and the G7 price cap
- The report added that the EU ban on Russian oil products from Feb 5 could soon mean that “the well-supplied oil balance at the start of 2023 could quickly tighten, however, as western sanctions impact Russian exports”
- IEA, in its January monthly report, revised up its global demand growth forecasts by 0.2 MMBbl/d to 1.9 MMBbl/d for 2023, with global oil demand expected to reach 101.7 MMBbl/d