Oil prices rose after industry executives voiced concerns about limited spare capacity in the market and uncertainty over supplies in Russia, as demand from China, the largest importer of crude oil, rebounded.
Brent crude futures rose 24 cents, or 0.28%, to $86.42 a barrel as of 0405 GMT, after rising 0.4% on Monday. West Texas Intermediate (WTI) crude rose 23 cents, or 0.29%, to $80.69 a barrel, after gaining 1% in the previous session.
Brent prices are on track to rise for the sixth session, the longest gaining span since May 2022, with China’s hopes of demand recovery and new refining capacity in Asia and the Middle East urging more crude capacity processed.
Supply concerns that helped oil prices soar overnight likely stemmed from Chevron’s CEO saying that supply concerns remain that there isn’t much volatility, and swing capacity in oil markets.
A key supply-related unknown factor for 2023 will be the interruption in Russia’s exports of oil and refined products.
Ships carrying Russian crude oil and products have to travel long distances to reach sanction-free markets. Oil stocks and volatile supplies are limited, making the global market vulnerable to any unexpected supply shortages.
The direction of demand depends on the release of January-February China trade data. Traders are looking for signs of recovery in demand after Beijing lifts pandemic controls. And Tuesday, they are eagerly awaiting China’s January and February oil trade data.
Reports of crude oil and product stockpiles in the US for the week ending March 3 are expected to show a record decline, according to a preliminary survey. Considering previous official Energy Information Administration (EIA) data, this could be the first drop in 10 weeks.
The weekly reports of the American Petroleum Institute (API), an industry group, will be released at 2130 GMT. Official data from the Energy Information Administration (EIA) will be released on Wednesday at 1530 GMT.
For the remainder of March, analysts’ price expectations for oil benchmarks continue to rise.
The oil market was trading near the bottom of the last trading range and there seems to be a lot of upside risk to help keep prices above the $80 level for now.