Oil rose as a major oil pipeline was temporarily halted, while key producers flagged stronger Chinese demand just as more sanctions on Russian flows take effect.
West Texas Intermediate climbed toward $74 a barrel after closing on Friday at the lowest level in about a month. Turkey halted oil flows to the Ceyhan export terminal on the Mediterranean coast after a major earthquake. There were no leaks detected on the pipelines feeding oil to the port, according to an official who asked not to be identified.
The disruption comes amid ongoing optimism around stronger Chinese consumption, after International Energy Agency Executive Director Fatih Birol said at the weekend that the world’s largest crude importer could see a stronger-than-anticipated rebound that’ll boost demand for crude. That view was echoed by the chief executive officer of Kuwait Petroleum Corp. on Monday.
“The prospect of improving Chinese oil demand and some supply disruptions are modestly supporting oil prices on Monday,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
A European ban on seaborne imports of Russian oil products in response to the war in Ukraine came into effect on Sunday. The measure is coupled with a price cap similar to one in effect for crude, and designed to curb Moscow’s revenues while enabling products to flow to third countries.
Oil has endured a bumpy start to 2023 even as China’s ditching of Covid Zero fanned a wave of speculation that it will ramp up purchases. At the same time, the Organization of Petroleum Exporting Countries and its allies have opted to maintain supply cuts, with Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, saying at the weekend that the kingdom will remain cautious about raising supply.
- WTI for March delivery rose 0.6 per cent to $73.84 a barrel on the New York Mercantile Exchange at 8:37 a.m. in London.
- Brent for April settlement added 0.8 per cent to $80.59 a barrel on the ICE Futures Europe exchange.
Demand in China is rising strongly following the ending of coronavirus lockdowns, Sheikh Nawaf Al-Sabah, head of Kuwait Petroleum, told Bloomberg Television in Bangalore, India. “With the opening up, we’re seeing an increase in demand that is sustainable. This is not a dead-cat bounce.”
Goldman Sachs Group Inc., meanwhile, reiterated a forecast that oil prices are set to top $100 a barrel this year. With sanctions likely to cause Russian oil exports to drop and Chinese demand expected to recover, crude will climb, analyst Jeff Currie said in Riyadh, Saudi Arabia, on Sunday.
© 2023 Bloomberg L.P.