Brent gains slightly on signs of improving oil demand in China
The front-month ICE Brent contract inched $0.04/bbl up on the day, to trade at $82.51/bbl at 09.00 GMT.
PHOTO: Oil pump jacks. Getty Images
Upward pressure:
Signs of an improving demand environment in China have supported Brent futures’ upward move today.
China imported about 88.31 million mt of crude oil in the first two months of this year amid strong travel demand. The country’s daily imports stood at around 10.74 million b/d, up 3.3% from 10.40 million b/d in January and February of the previous year, market intelligence provider JLC reported citing data from China’s General Administration of Customs (GACC).
“The reality is that Chinese oil demand has been much better than previously reported,” Price Futures Group’s senior market analyst Phil Flynn said.
Meanwhile, Brent also made gains as tension in the Gulf of Aden intensified. In a clear escalation of the conflict, the latest drone attack launched by Iran-backed Houthi insurgents claimed the lives of three seafarers, according to the US Central Command (CENTCOM). This recent incident has heightened geopolitical risks in the region, leading to market uncertainties and impacting oil prices.
Brent’s prices will remain elevated if the insurgency in the Red Sea continues to worsen, analysts said. “Tensions in the Middle East continue to keep traders on edge,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Downward pressure:
The weekly US crude stock build has put some downward pressure on Brent's price today.
Commercial US crude inventories increased for the sixth consecutive week, rising by 1.4 million bbls to 448.5 million barrels in the week ending 1 March, the EIA reported.
US Federal Reserve's chief Jerome Powell has indicated that the central bank plans to reduce interest rates this year. However, the timing of these rate cuts remains uncertain due to the ongoing inflationary pressures in the country.
“We believe that our policy rate is likely at its peak for this tightening cycle,” CNBC reported US Fed chairman Jerome Powell as saying.
Higher US interest rate can reduce global demand for oil as it makes buying costlier for non-dollar currency holders.
By Aparupa Mazumder
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