Oil Updates — Crude prices dips; IEA expects global oil market to be tight in H2 2023
Arab News
RIYADH: Oil prices retreated on Thursday after rising for two sessions, with investors still showing lingering concern over a possible US recession and weaker oil demand.
Brent crude fell 8 cents, or 0.09 percent, to $87.25 a barrel by 11.30 a.m. Saudi time, while US West Texas Intermediate slid 7 cents, or 0.07 percent, to $83.19.
Both benchmarks rose 2 percent on Wednesday to their highest in more than a month as cooling US inflation data spurred hopes the Federal Reserve is likely to stop hiking interest rates.
Previous tightening, however, which has lifted interest rates to their highest since 2007, raised concerns that the Fed’s focus on halting inflation might throttle economic growth and future oil demand in the world’s biggest oil user.
China’s March crude oil imports surge 22.5%
China’s crude oil imports in March surged 22.5 percent from a year earlier to the highest since June 2020, data showed on Thursday, as refiners stepped up runs to capture fuel export demand and in anticipation of domestic economic recovery.
Crude imports in March totaled 52.3 million tons, or 12.3 million barrels per day, according to General Administration of Customs data. This data compares with 10.1 million bpd of crude imported in March last year.
The imports were in line with expectations of higher refinery runs, and product inventory draws on improved demand following the lifting of COVID restrictions late last year.
Total crude imports for the first quarter stood at 136.6 million tons, a 6.7 percent increase over 127.9 million tons in the same period last year.
China imported 8.9 million tons of natural gas in March, up 11.2 percent from 8 million tons a year ago. Total natural gas imports for the first quarter stood at 26.7 million tons, down 3.6 percent from last year.
Oman crude oil deliveries on DME surged 18% in Q1
The Dubai Mercantile Exchange delivered 63.77 million barrels of Omani crude via its exchange delivery mechanism in the first quarter of 2023, up 18 percent from the 54.01 million barrels in the same period in 2022.
“We always look at the physical performance of the exchange as a true indicator of market dynamics in the East of Suez market. We have seen a strong boost in crude oil demand since the beginning of the year,” said Raid Al-Salami, managing director of DME.
DME Oman Crude Oil futures are physically settled contracts, a core Middle East crude pricing benchmark. Middle East national oil companies use the contract’s daily pricing to determine oil prices for experts in the region.
Global oil market could be tight in second half 2023: IEA’s Birol
The global oil market could see tightness in the second half of 2023, which would push oil prices higher, Fatih Birol, executive director of the International Energy Agency, said on Wednesday.
Oil prices have surged above $80 since the beginning of the month after the Organization of the Petroleum Exporting Countries and allies, including Russia, collectively known as OPEC+, surprised markets with an announcement of voluntary production cuts of 1.66 million bpd from May until the end of 2023.
Global markets have restructured after Russia invaded Ukraine last year, prompting sanctions on Russian energy that forced countries to look elsewhere for barrels.
Birol said that Europe was particularly susceptible to declines in Russian supply, but a milder winter helped avoid a worst-case scenario this year.
However, next winter is expected to be challenging for the region in terms of energy supplies, Birol said at the Columbia Global Energy Summit in New York.
Birol added that Europe should be able to do without Russian liquefied natural gas.
Birol on Wednesday added that global fossil fuel consumption could peak before the late 2020s.
(With input from Reuters)
