International oil prices rise, but bulls must be wary of this force that disrupts the balance of supply and demand
International oil prices rose on Wednesday as signs of slowing U.S. inflation eased fears that the world’s largest oil consumer might face a recession due to further interest rate hikes. But gains were capped by Russia’s tendency to boost oil exports to Asian buyers at steep discounts, which might destabilize the oil market. The market awaits the outcome of the OPEC+ meeting.
At 16:11 Beijing time, NYMEX crude oil futures rose 0.66% to $79.39 a barrel; ICE Brent crude futures rose 0.43% to $85.83 a barrel.
Data released overnight showed U.S. labor costs rose at the slowest pace in a year in the fourth quarter as wage growth slowed. “…signs of cooling inflation raise the odds that the Fed will pause rate hikes,” ANZ commodity analysts said in a note.
All eyes are now on the meeting of the Organization of the Petroleum Exporting Countries and partners including Russia (OPEC+). Oil-producing countries are expected to agree to maintain current production targets agreed in November last year.
Foreign media surveys found that due to the decline in Iraqi exports and Nigeria’s production has not yet returned to normal, OPEC members’ oil production fell in January. Compared with the target production stipulated in the OPEC+ agreement, there is a gap of regarding 920,000 barrels per day. 780,000 barrels per day expanded.
Independent oil market expert Sugandha Sachdeva said: “Oil prices appear to be poised for a period of heightened volatility…OPEC+ is likely to stick to its current production targets. However, Russia tends to increase oil exports to Asian buyers at deep discounts, This might destabilize the oil market.”
On December 5 last year, the Group of Seven (G7), Australia and 27 EU countries capped the price of Russian crude at $60 a barrel. The price limit order allows non-EU countries to import Russian crude oil by sea, but prohibits Western shipping companies and insurance companies from handling Russian crude oil cargoes sold above the above-mentioned limit. Russia has said it will not accept oil price caps and will ban exports of oil and refined products to countries imposing price caps for five months from Feb. 1.
But most Russian oil is currently trading below that level. On Tuesday (January 31), seaborne Urals crude was at $49.50 a barrel fob in Primorsky Krai on the Pacific coast and $47.83 a barrel in Novorossiysk on the Black Sea coast.
Crude loadings from Primorsky Krai, Ust-Luga (on the Baltic coast) and Novorossiysk are on track to hit a record 9.5 million tonnes this month, traders said, supported by strong demand in Asia, higher oil prices and increased supply from tankers. above multi-month highs.
