Oil markets on the morning newswireOPEC's Will to Stabilize Oil Markets in Question Ahead of February Meeting, RBC Capital Markets Says
05:49 AM EST, 01/06/2023 (MT Newswires) -- Ahead of the Organization of the Petroleum Exporting Countries' February meeting, questions about its will to stabilize the oil markets will likely grow amid extreme volatility and a sharp selloff for Brent crude, RBC Capital Markets said in a Thursday note.
The producer group late last year decided to cut its production target by 2 million barrels per day in an effort to provide support to prices. The output reduction was larger than expected as OPEC cited uncertainty surrounding the global economic and oil market outlooks at the time.
The futures curve has undergone three distinct pricing cycles throughout oil market history, according to RBC. The forward curve is seen as undervalued and the market is anticipated to embark on the fourth cycle, RBC noted.
Meanwhile, natural gas prices have fallen much lower and faster than RBC's expectations as warm weather results in well-supplied markets, shifting its index rebalance expectations, RBC said.
Demand Concerns Cap Gains in Crude Oil Prices Amid China Reopening Uncertainty, OANDA Analyst Says
05:30 AM EST, 01/06/2023 (MT Newswires) -- Crude oil prices edged higher but demand concerns are capping gains amid uncertainty surrounding China's reopening, with rising COVID cases threatening the short-term demand outlook, OANDA analyst Edward Moya said in a Thursday note.
Brent crude gained 0.8% to $79.32 per barrel while West Texas Intermediate crude rose 0.9% to $74.36/b early Friday. Saudi Arabia cut prices for oil sold to Asia to their lowest level since November 2021 amid global pressures hitting oil prices, Reuters reported Thursday.
Crude oil prices were due for a rebound after one of the worst starts of the year and energy traders jumped on the news of Colonial Pipeline halting operations, Moya said. The unplanned disruption helped oil prices stabilize, the analyst added.
Meanwhile, the US Energy Information Administration's crude oil inventory report was mixed but showed a drop in demand as gasoline demand fell the most since March 2020 and crude oil and distillate demand posted significant declines week over week.