🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

Oil settled up as rising supplies face Chinese demand hopes

Published 02/28/2023, 09:28 PM
Updated 03/01/2023, 03:15 PM
© Reuters. FILE PHOTO: An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS
LCO
-
CL
-

By Laura Sanicola

(Reuters) -Oil prices settled up slightly on Wednesday as signs of ample supply, including growing U.S. crude inventories, offset growing hopes for higher demand after a jump in manufacturing in top crude importer China.

Brent crude futures settled up 86 cents, or 1%, to $84.31 a barrel. U.S. West Texas Intermediate crude (WTI) settled up 64 cents, or 0.8%, to $77.69.

U.S. crude inventories rose by 1.2 million barrels last week to 480.2 million barrels last week to the highest since May 2021, government data showed, beating analyst expectations of a 457,000-barrel rise. It was the 10th straight weekly increase.

"Until this supply overhang is able to narrow amidst some

decline in Cushing, US crude supply trends could further limit additional price upside," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. Cushing, Oklahoma is the hub for U.S. crude storage.

A widening discount of WTI to Brent contributed to a jump in U.S. crude exports last week to record high at 5.6 million barrels per day, which resulted in a smaller build than in previous weeks, according to UBS analyst Giovanni Staunovo.

In other signs of ample supply, Russia's oil production reached the pre-sanctions level for the first time in February, the Kommersant business daily reported. The Organization of the Petroleum Exporting Countries' production also rose in February, a Reuters survey showed.

"China's economy is rebounding now, and this can only be a positive driver for oil prices," said Stephen Brennock of oil broker PVM, adding that resilient Russian supply is keeping buying interest at bay.

Russia's second-largest oil producer Lukoil has set up ship-to-ship (STS) loadings of Urals oil near the western port of Kaliningrad, Refinitiv Eikon data showed and trading sources told Reuters.

STS loadings of Russian Urals crude hit a record high in the Mediterranean in January as traders moved cargoes onto larger vessels to make long-haul shipments to Asia more cost-effective.

An official index showed China's manufacturing activity expanded in February at the fastest pace in more than a decade, feeding hopes for a boost in oil demand.

© Reuters. FILE PHOTO: An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS

While China's official manufacturing purchasing managers' index (PMI) climbed to 52.6 last month from 50.1 in January, a private sector survey also showed activity rising for the first time in seven months.

"Another round of upside surprise in China's PMI further provides conviction of a stronger than expected recovery, which supports a more optimistic oil demand outlook," said Yeap Jun Rong, market strategist at IG.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.