Oil prices settle lower on stronger supply outlook
Oil prices settled lower on Friday (Jan 27), making their weekly finish flat to lower, as indications of strong Russian oil supply offset better-than-expected US economic growth data, strong middle distillate refining margins and hopes of a rapid recovery in Chinese demand.
Brent futures settled down US$0.81 or 0.9 per cent at US$86.66 per barrel, up just US$0.03 from last week’s settlement. US crude fell US$1.33 or 1.6 per cent to settle at US$79.68, 2 per cent lower on the week.
Oil loadings from Russia’s Baltic ports are set to rise by 50 per cent this month from December as sellers try to meet strong demand in Asia and benefit from rising global energy prices, traders said and Reuters calculations showed.
Urals and Kebco crude oil loadings from Ust-Luga over Feb 1-10 may rise to one million tonnes from 0.9 million in the plan for the same period of January, traders also.
“If Russian supply remains strong heading into next month, oil is probably going to continue to trend lower,” said John Kilduff, partner at Again Capital LLC in New York.
He added that profit taking ahead of the weekend may also have driven prices lower.
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US energy firms this week kept oil and natural gas rigs steady at 771, energy services firm Baker Hughes Co BKR.O said in its closely followed report on Friday.
Meanwhile, Opec+ delegates meet next week to review crude production levels, with sources from the oil producer group expecting no change to current output policy.
The US Federal Reserve’s next decision on interest rates will be made at a meeting over Jan 31 and Feb 1 against a backdrop of a dip in inflation and gross domestic product that grew by a faster than expected 2.9 per cent in the fourth quarter.
A 4.2 million barrel build this week in stocks at Cushing, the pricing hub for NYMEX oil futures, also weighed on the market.
In China, critically ill Covid-19 cases are down 72 per cent from a peak early this month while daily deaths among Covid patients in hospitals have dropped by 79 per cent from their peak, pointing to a normalisation of the Chinese economy and boosting expectations of a recovery in oil demand. REUTERS
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