- Oil extends gains on optimism over China’s demand rebound
- Mar ’23 WTI gains 75c this morning to trade around $82/Bbl
- Crude prices were supported by expectations of recovering Chinese demand following the country's Lunar New Year season and a weaker dollar (lowest since June ’22)
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- Expectations for tightness in the crude product markets are also in focus as sanctions against Russian petroleum products are scheduled to go into effect on February 5
- Over the weekend, G7 and EU members discussed imposing a price cap on Russian oil products that would be similar to the one now in place for Russian seaborne crude exports
- U.S. Treasury Secretary Yellen expressed optimism that Russian oil products could be subject to a price cap like the one imposed on Russian oil (BBG, Reuters)
- Although she noted that it would be more complicated, she said that the nations involved have “studied these markets very carefully and believe we’re going to come out with a set of caps that will achieve the same things that we’ve achieved with crude so far”
- The G7 nations intend to implement two price caps for Russian refined oil products on February 5, depending on whether the product trades at a premium or discount to crude
- Seaborne Russian crude exports for the week ending January 20 were 2.98 MMBbl/d, broadly consistent with levels recorded for most of the second half of 2022 despite declines at some pacific ports
- The price cap level ($60/Bbl) on Russian crude exports will also be reviewed by G7 officials in March 2023
- The French CGT union's energy branch has called for a 48-hour strike to begin this Wednesday, and a 72-hour strike to begin on February 6 (BBG)
- These actions, along with previous strikes, have affected the delivery of fuels from three refineries that TotalEnergies SE operates
- The CGT energy branch stated that it would also not rule out talking with strikers about taking additional steps, such as providing free energy, targeted power cuts, or taking actions that would affect operations at LNG terminals and gas storage facilities