Brent futures set to decline over 5% on the week

Front-month ICE Brent has declined by $1.08/bbl on the day, to $81.86/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent is holding on to the hopes that China will see a strong economic recovery this year after the International Monetary Fund’s (IMF) positive outlook earlier this week. The IMF projected that China’s GDP growth will rebound to 5.2% this year.

The G7 alliance could finalise price caps on refined Russian oil products by today, as EU sanctions come into effect on 5 February. The EU has proposed price caps of $100/bbl on "premium" refined products and $45/bbl on "discounted" ones.

Downward pressure:

Brent is likely to remain rangebound between $85-95/bbl this year, JPMorgan Asset Management’s executive director Kerry Craig tells CNBC. “Unless we see an absolute surge in growth from China, which I think at least for four quarters ahead given the more structural limitations ahead, I don’t think we expect to see oil past $100/bbl this year," adds Craig.

Russia remains undeterred by the upcoming 5 February sanctions. “We have no grounds so far to believe that refining or production of petroleum products will go sharpy down [following the February 5 sanctions],” says Russian Energy Minister Nikolay Shulginov, according to state-run news agency TASS.

Following an interest rate hike by the US Federal Reserve this week, the European Central Bank and the Bank of England have raised their key interest rates by 50 basis points. They have also hinted at further increases, just as the Fed did earlier this week.

By Konica Bhatt

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