Wednesday, November 30, 2022

Oil prices climb on supply and demand fundamentals

Oil prices rose on Tuesday on high demand for the summer fuel, while supplies remained tight due to sanctions on Russian oil following the invasion of Ukraine.

Brent crude rose $1.61, or 1.4 percent, to $115.74 a barrel as of 0825 GMT. US West Texas Intermediate (WTI) crude for July, which ended later on Tuesday, rose $2.29, or 2.1 percent, to $111.85.

The more active WTI contract for August rose $2.48 to $110.47 a barrel.

Despite concerns over economic growth, the latest data on flight activity and dynamics on US roads reflects demand for solid oil, said UBS analyst Giovanni Stanovo.

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“We expect oil demand to improve further with the reopening of China, summer travel in the Northern Hemisphere and warming weather in the Middle East. With the increase in demand outpacing supply in the coming months, we are expecting an increase in oil prices,” he said.

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Prices have been supported by supply concerns following sanctions on oil shipments from Russia, the world’s second-largest oil exporter, and questions about how Russian production could fall due to restrictions on equipment needed for production.

Madhavi Mehta, Commodity Research Analyst, Kotak Securities, said, “Supply worries are unlikely to ease unless the Russo-Ukraine war is resolved, or until we see a sharp increase in supply from the US or OPEC. Is.”

Chances of a successful nuclear deal with Iran and the lifting of US sanctions on the Iranian energy sector are looming.

Iran is further increasing its uranium enrichment by preparing to use advanced centrifuges at its underground Fordo site, a United Nations nuclear monitoring report seen by Reuters showed.

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“Iran’s measures, if correct, mean we won’t see a return to Iranian crude to major world markets any time soon,” said OANDA analyst Jeffrey Haley.

Weekly US petroleum inventory data will be delayed by a day this week due to a US public holiday on Monday, American Petroleum Institute industry data for the week ending June 17 on Wednesday and US Energy Information Administration data scheduled for Thursday.

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