On Wednesday, oil prices increased further after having risen by more than 4 percent the previous day in response to concerns regarding tightening crude supplies.
At 2.23 p.m. local time in the United Arab Emirates, the price of a barrel of Brent crude oil was up 1.12% to $84.63 while the price of a barrel of West Texas Intermediate crude was up 1.4% to $78.22. Brent is the benchmark for approximately two thirds of the world’s oil supply.
On Tuesday, Brent finished the day with a gain of 3.33 percent, reaching $83.69 per barrel, while WTI finished the day with a 4.09 percent gain, reaching $77.14 per barrel.
According to data provided by the American Petroleum Institute, crude stocks in the United States experienced a decrease of approximately 2.2 million barrels the previous week, despite expectations of a rise in demand for fuel.
“However, there was an increase in petroleum stockpiles of more than 5 million barrels during the same week. Because of this, the potential for gains brought on by data may be reduced “said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. ”
After it was determined that pipelines and storage tanks were not damaged by the massive earthquake that occurred on Monday, Turkey issued an order to resume oil flows to a crude terminal that has a capacity of 1 million barrels per day.
It is anticipated that the BTC terminal, which ships crude oil from Iraq and Azerbaijan to international markets, will resume operations today.
According to Mr. Moya, who works in the energy trading industry, “Oil may rally a little bit more as many energy traders are still trying to figure out how robust will China’s reopening be this quarter.”
“In the short term, a robust labour market in the United States should prove to be supportive of WTI crude, which could pave the way for a rally back towards the $80 level,”
Jerome Powell, chairman of the Federal Reserve in the United States, stated on Tuesday that interest rates will need to be increased to a level that is higher than what the markets are currently anticipating.
According to reports from an event that took place in Washington, Mr. Powell stated that given the robust data on the labour market, it would likely take a “significant period of time” to bring inflation down. This was quoted by the media.
According to Daniel Richards, who serves as Mena economist for Emirates NBD, Mr. Powell “did forecast that inflation would decrease this year, and some people took his commentary to suggest that he wasn’t as hawkish as he could have been given the circumstances.
Total US non-farm payrolls added 517,000 jobs in January, said the Labour Department last week, far exceeding a Reuters estimate of 185,000. Additionally, it was 13,000 more than the amount of jobs that were created in January of 2022.
The unemployment rate reached a new low of 3.4 percent, a new record low in the last 53 years, after falling from 3.5 percent.
The Federal Reserve hiked interest rates by 25 basis points the week before last and signalled that more hikes were on the horizon.
Since the beginning of the year, this was its seventh increase. The most recent release puts the Federal Reserve’s goal range between 4.5 and 4.75 percent, which is around 50 basis points below its prediction for the end of the year, which was 5.1 percent.
The price of oil has decreased for the last two weeks in a row, despite the fact that China, the world’s second-largest economy and the leading importer of crude oil, has resumed normal business operations after almost three years of strict compliance with Covid-19 regulations.
“The oil market seems relaxed that neither China’s reopening nor Western sanctions against Russia significantly limit supplies,” Norbert Rucker, head of economics and next generation research at Julius Baer, said. “Judging by the latest price easing, the oil market seems relaxed that neither China’s reopening nor Western sanctions against Russia significantly limit supplies.”
“On the longer term, we anticipate lower prices, which is in line with the forecasts of the futures market. The uptick in market sentiment seemed to be fleeting and has already begun to go in the other direction as of late “said Mr Rucker.