- Oil extends losses amid concerns of oversupply and a stronger US Dollar
- March ’23 WTI lost nearly 80c this morning to trade around $78/Bbl
- IEA, in its February Monthly Oil report, raised its global demand forecast, citing China’s reopening
- OPEC+ raised its estimated global demand for 2023 by 0.1 MMBbl/d, but the bloc expressed uncertainty regarding global economic activity
- US Inflation data and remarks from Fed officials that were interpreted as signals that interest rates might rise also weighed on the market
- The announcement this week that the US would sell 26 MMBbl of oil from the SPR also put downward pressure on crude prices
- A slightly stronger US Dollar also weighed on prices this week
- A stronger dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- IEA raises 2023 global oil demand growth forecast as China reopens (BBG)
- The agency raised the global demand forecast by 0.5 MMBbl/d for 1Q2023 and by 0.1 MMBbl/d for this year
- As a result, the agency projected in its monthly report that global consumption would increase by 2 MMBbl/d this year to an average of 101.9 MMBbl/d
- Following a record decline in 2022, the IEA forecasts that Chinese demand will increase by 0.9 MMBbl/d this year to reach 15.9 MMBbl/d
- IEA still forecasts that the market will be in surplus for the year’s first half as Russian output has outperformed expectations
- However, the agency sees a 1 MMBbl/d decline in Russian supply by the end of the first quarter
- Chinese refiners resume purchases of Russian Urals crude (Reuters)
- China’s largest state-owned refiners, PetroChina and Sinopec, resumed purchases of discounted Urals crude after a brief pause in late 2022, just before the EU embargo on Russian crude started
- China's imports of Urals fell to just 1.45 MMBbl in December from a peak of 9.67 MMBbl in August, according to data from Kpler
- The move comes just as demand for transportation fuel is rebounding in China after it ended its zero-COVID policy