Crude oil prices rose slightly on Wednesday, driven by signs of increased demand in China and the ongoing escalation in the Russia-Ukraine conflict.
At the time of writing, Brent crude was priced at $73.25 per barrel, while West Texas Intermediate (WTI) stood at $69.39 per barrel. Both benchmarks had gained more than $2 per barrel since last Friday, following Ukraine’s launch of ATACMS missiles at Russian targets. This came after a policy shift by the Biden administration, which reversed its stance on using these missiles for strikes within Russian territory.
ANZ analysts noted that the situation marked a renewed rise in tensions between Russia and Ukraine, highlighting the risk of disruptions in global oil supply.
In China, signs are emerging that crude oil demand is recovering. According to Kpler data, Chinese oil imports this month may reach near-record levels, despite previous reports suggesting that China’s oil demand growth had stalled. The Kpler report follows an update on China’s oil inventories, which showed a reduction in the surplus from 930,000 barrels per day (bpd) in September to 550,000 bpd in October. However, Reuters’ Clyde Russell cautioned that the surplus reduction might not signal a strong bullish trend for oil prices, as it could indicate that China is importing more crude than it currently needs.
Additionally, the International Energy Agency (IEA) may have underestimated the global oil inventory drawdown in the final quarter of this year. Preliminary data cited by Bloomberg suggests that global oil stocks have fallen by 1.16 million bpd this quarter, far exceeding the IEA’s earlier forecast of a 380,000 bpd decline.
On the downside, Norway’s Johan Sverdrup oil field resumed production after a brief suspension caused by a power outage. Meanwhile, the American Petroleum Institute reported an increase of 4.75 million barrels in U.S. crude oil inventories for the week ending November 8.
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