The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil inched down, by $1.29 (-1.7%) to $76.83 per barrel in February. That decrease occurred within the context of a noticeably weaker U.S. dollar (broad trade-weighted index basis -- goods and services), the lagged impacts of December’s drop of 1.1 million barrels-per-day (BPD) in the amount of petroleum products demanded/supplied (to 19.5 million BPD), and accumulated oil stocks that arced to near the top of the five-year average range (February 2023 average: 471 million barrels).
Selected
highlights from the 24 February 2023 issue of OilPrice.com’s Oil &
Energy Insider include:
“Yet another build in U.S. crude inventories added to downward pressure on oil prices on [February 24],” wrote OilPrice.com editor Tom Kool. “The EIA's report weighed particularly heavily on WTI, opening an arbitrage window into both Europe and Asia. The market reaction to another 7.6-million-barrel build was originally subdued by speculation of a further production cut from Russia and rumors of Chinese demand returning. Ultimately, inflation fears and continued inventory builds pushed oil prices lower, with ICE Brent trending around the $81 per barrel mark.”
A Flotilla of US Oil Is Set to Sail to China. The relative weakness of WTI has prompted
a revival in Chinese buying of US barrels as China’s state-owned Sinopec and
Petrochina have fixed at least 10 VLCC tankers for March-loading cargoes out of
the US Gulf Coast.
Russia Fixes Crude Discounts on Exports. Russia’s President Vladimir Putin signed
a law that capped the maximum possible discounts on Urals crude as part of an
ongoing oil taxation overhaul, with the maximum discount set at $34 per barrel
in April and gradually declining to $25 per barrel in July.
Iraq to Drop US Dollar in China Exports. The Iraqi central bank announced
this week that it had allowed trade from China to be settled directly in yuan
rather than US dollar, a relief for the country’s energy sector as since 2022
the US Treasury has enforced stricter controls on transactions by Iraqi banks.
Tight Diesel Stocks Remain Inflation Risk. With middle distillate stocks below the 10-year
average in each of the main trading regions and a whopping 40 million barrels
lower in Europe, any swift uptick in manufacturing and industrial activity is
poised to send diesel prices back into an upward spiral.
China Locks in Another US LNG Term Deal. China Gas Holdings, one of the largest independent gas distributors in China, signed two separate 20-year LNG deals with US exporter Venture Global for a total of 2 million tons LNG per year, adding to a flurry of similar deals recently.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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