- Oil set to post a second consecutive-weekly gain on optimism over China’s demand
- Feb ’23 WTI gains nearly 50c this morning to trade around $81/Bbl
- Rising optimism about the return of Chinese demand has been the main bullish factor for oil markets as China prepares for its New Year festivities
- China’s biggest oil trader Unipec bought cargoes equivalent to 9 MMBbl this month; signaling consumption has picked up
- Additionally, hopes that the Fed will ease its interest rate hikes have supported crude prices
- The market shrugged off this week's large 8.4-MMBbl rise in U.S. crude inventories
- JP Morgan says oil will struggle to surpass $100/Bbl this year (BBG)
- The bank raised estimates for Chinese oil demand growth in 2023 by 0.230 MMBbl/d to 0.770 MMBbl/d but said crude prices would remain below $100/Bbl
- Despite estimates that Chinese demand is on track to reach a record high of 16 MMBbl/d, the bank forecasts that global supply will rise 50% faster than demand this year
- JPM maintains their forecast for Brent to average $90/Bbl in 2023
- “Absent any major geopolitical events, it’d be difficult for oil prices to breach $100/Bbl in 2023,” said the bank in a note on Thursday
- Additionally, the note said that OPEC+ would need to cut a further 0.400 MMBbl/d for the $90 Brent forecast to be realized
- China’s imports of Russian crude fell to the lowest since March (BBG)
- China's crude imports from Russia fell by 1.34 million tons last month to 6.47 million tons, the lowest level since March 2022, according to the General Administration of Customs
- Despite the report's findings that Russian crude imports have decreased, Moscow continues to be China's second-largest crude supplier after Saudi Arabia (7.12 million tons); in contrast, US shipments to China have decreased by 31% year over year
- An escalation of western sanctions may have deterred some purchases from state refiners