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Oil prices settled 1% higher on Jan. 19, extending a recent rally built around rising Chinese demand, while the market wrote off a second straight week of large builds in U.S. crude inventories.
Brent crude futures gained $1.18, or 1.4%, to settle at $86.16 per barrel, while WTI crude futures rose by $0.85 cents, or 1.1%, to settle at $80.33 per barrel. Those were the highest closing levels for both contracts since Dec. 1.
Chinese oil demand climbed by nearly 1 MMbbl/d from the previous month to 15.41 MMbbl/d in November, the highest level since February, according to the latest export figures published by the Joint Organisations Data Initiative.
Energy markets could be tighter in 2023, especially if the Chinese economy rebounds and the Russian oil industry struggles under sanctions, International Energy Agency (IEA) head Fatih Birol said on Jan. 19.
Oil prices were down by more than a dollar per barrel earlier in Jan. 19’s session, as traders booked profits and U.S. data showed the economy losing momentum. Both oil benchmarks hit their highest level in more than a month on Tuesday.
Prices also came under pressure briefly after U.S. Energy Information Administration (EIA) data showed U.S. crude stocks last week rose by 8.4 MMbbl, their biggest gain since June 2021.
UBS analyst Giovanni Staunovo described the EIA data as a “bearish report, with large crude and gasoline inventory increases, but an improvement from last week, with a recovery of implied oil demand and refinery runs from the impact of [Winter] Storm Elliot.”
U.S. gasoline refining margins traded at a new five-month high for the fourth straight session on Jan. 19, amid optimism about rising travel demand from China's reopening and threats to refined products supply from strikes in France.
"All roads seem to lead back to the same input - rising Chinese demand," said John Kilduff, partner at Again Capital LLC in New York.
"There's just so much bullish sentiment out there, so much fear, that it keeps underpinning this market."
2024-01-03 - CNOOC’s South China Sea development is expected to reach peak production of 22,600 bbl/d in 2025.
2024-02-06 - New techniques and technologies being piloted by Chevron in the Permian Basin are improving drilling and completed cycle times. Executives at the California-based major hope to eventually improve overall resource recovery from its shale portfolio.
2024-01-02 - With Petrobras’ Mero-2 coming online, the Mero field is expected to reach a production capacity of over 410,000 bbl/d of oil.
2024-01-07 - California’s Trio Petroleum plans to restart oilfield production at McCool Ranch, where six wells that previously reached a production peak of 400 bbl/d.
2024-01-09 - ONGC’s M Field represents the second phase of the larger 98/2 Block development project which is expected to reach peak production of 45,000 bbl/d and 10 MMcm/d.