Brent crude oil prices stabilize
Business
Business activity stats, supply restraints, expectations for Chinese demand revival cause stabilisation
LONDON (Reuters) - After early falls Brent crude oil prices stabilised on Tuesday helped by stronger than anticipated business activity statistics, supply restraints and expectations for a revival in Chinese demand.
Buoyancy support Growth indicated that the recovery in euro zone company activity gained momentum this month indicating that the prognosis for the European economy was less dire than originally anticipated, according to a poll released on Tuesday. Businesses in Britain reported an unexpected uptick in activity, a sister study stated.
At 1152 GMT the price of benchmark Brent crude was $83.81 per barrel down 26 cents or 0.3 percent. Tuesday's expiration of US West Texas Intermediate crude was up $1.02 to $77.36. According to Tamas Varga of oil trader PVM the demand for oil is expected to outpace supply in 2023.
"Following a rocky 2022 it looks more likely than not that the world economy will avoid recession, interest rates will peak somewhere in the summer and global oil consumption will steadily climb while the oil supply will struggle to keep up with the increase in demand," Varga added.
Due to a United States holiday the US crude contract did not settle on Monday. As a result instead of the normal Tuesday the American Petroleum Institute will release its weekly report on US inventories on Wednesday.
The release of the US Federal Reserve's most recent meeting's minutes on Wednesday will be the major topic of attention for larger financial markets as recent data increased the possibility that interest rates will stay higher for longer.
Oil prices increased by more than one percent on Monday as a result of optimism over Chinese demand which analysts anticipate to recover this year after COVID-19 limits were lifted.
After the imposition of price ceilings on Russian oil and oil products by the West due to the invasion of Ukraine, Russia expects to reduce oil production by 500,000 barrels per day or around five percent of its output in March.
Organization of the Petroleum Exporting Countries (OPEC) and allies decided in October to reduce oil output objectives by two million bpd through the end of 2023. This producer group known as OPEC+ includes Russia.
