November 3, 2022 [BusinessPost] – Oil rose on Tuesday on optimism that China, the world’s second-largest oil consumer, could ease its strict COVID curbs, causing the Brent crude to climb by $1.84 or 2 per cent to settle at $94.65 a barrel, as the United States West Texas Intermediate (WTI) crude gained $1.84 or 2.1 per cent to trade at $88.37 per barrel.
The market swayed bullish after it emerged that a “Reopening Committee” had been formed by Politburo Standing Member Wang Huning and was reviewing overseas COVID data to assess various reopening scenarios, aiming to relax COVID rules in March 2023.
A Chinese foreign ministry spokesman later said he was unaware of the situation.
The outcome showed that prices continued on a stronger foot as Brent and WTI benchmarks both registered monthly gains in October, their first since May.
This is coming after the Organisation of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, cut their targeted output by 2 million barrels per day.
The OPEC+ cuts and record U.S. oil export data also support oil price fundamentals.
OPEC raised its forecasts for world oil demand in the medium and long term on Monday, saying that $12.1 trillion of investment is needed to meet this demand.
These bullish factors have offset demand concerns raised by COVID-19 curbs that lowered China’s factory activity in October and cut into its imports from Japan and South Korea.
In a further cap to price gains, US crude oil stocks are likely to rise in the week of October 28.
Meanwhile, the Riyadh-based International Energy Forum (IEF) thinks Brent crude prices could easily break above $100 per barrel again if losses of supply from Russia are close to 3 million barrels per day when the EU embargo on Russian crude imports by sea enters into force next month (Dec.
The IEF and many consuming countries are concerned about what will happen to the oil market when the EU sanctions kick in.
According to the IEF, the world’s largest international organization of energy ministers, the oil market could lose anywhere between 1 million barrels per day and 3 million barrels per day of oil supply from Russia when the sanctions take effect.