Oil Prices Mixed as Market Weighs Positive Chinese Data Amid Rise in Supply

March 8, 2024
Crude Oil Prices

By Adedapo Adesanya

Oil prices were mixed on Thursday as markets weighed new economic data from China against increasing supply that could create an imbalance in the market, with Brent crude futures flat at $82.96 per barrel, while the US West Texas Intermediate (WTI) crude futures ended 20 cents lower at $78.93 a barrel.

China’s imports and exports recorded growth, which suggested that global trade is turning a corner, which is a positive signal for policymakers as they try to shore up economic recovery.

Exports from the world’s second-biggest economy in the two months were 7.1 per cent higher than a year before, customs data showed on Thursday, while imports were up 3.5 per cent.

However, even as China posted a 5.1 per cent rise in crude imports during the first two months of the year from a year earlier, overall imports have been falling, continuing a trend of softening purchases by the world’s biggest buyer.

China, the world’s largest crude importer, saw oil cargo arrivals rise to a total of 10.74 million barrels per day in the first two months of 2024, compared to about 10.4 million barrels per day in January–February 2023.

The head of the International Energy Agency’s (IEA) oil markets and industry division, Ms Toril Bosoni, said that the global oil market is relatively well supplied, with demand growth slowing and supply increasing from the Americas.

The IEA therefore expects “relatively calm markets,” even though the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) recently decided to extend supply cuts, she added.

OPEC+ members, led by Saudi Arabia and Russia, agreed on Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter, giving extra support to the market amid concerns over global growth and rising output outside the group.

Russia also agreed to take an additional 471,000 per day voluntary production and export cut in the second quarter on top of the 500,000 per day voluntary reduction it took last year and extend it to year-end 2024. Russia announced that it will cut 350,000 per day from output and 121,000 per day from exports in April, but the entire cut of 471,000 per day in June will be on oil output.

While oil demand last year grew by some 2.3 million barrels per day, the increase in 2024 is expected to be smaller, at 1.2 million to 1.3 million barrels per day, Ms Bosoni said.

On Wednesday, the chairman of the US Federal Reserve, Mr Jerome Powell, said the central bank still expects to reduce its benchmark interest rate this year. On Thursday, the European Central Bank (ECB) kept its main interest rate unchanged at 4.0 per cent as expected.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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