Oil Closes in the Plus – Markets Expect Tight Supply after China Eases Lockdown

Crude oil futures closed higher on Tuesday (June 7), boosted by forecasts that global oil supplies will tighten due to a number of factors. These include China’s easing of lockdown measures and the pending nuclear agreement with Iran.

  • WTI crude futures were up 91 cents, or 0.8%, at $119.41 a barrel.
  • BRENT crude futures were up $1.06, or 0.9%, at $120.57 a barrel.

Crude oil futures rose on expectations that oil supply will tighten on the world market. As China eases its lockdown in Beijing and lifts the lockdown in Shanghai, demand for oil in China will increase.

Goldman Sachs raised its forecast for Brent crude oil prices for the period between the second half of 2022 and the first half of 2023 to $135 per barrel.

Goldman Sachs said oil markets were tightening as China’s oil demand increased following the easing of freeze measures to curb the spread of COVID-19. Meanwhile, Russia curbed its oil production after the European Union (EU) imposed sanctions on Russian oil.

Russia is expected to cut its oil production from 10.8 million barrels per day in May to 9.8 million barrels per day by the end of this year. Production in December 2022 is expected to increase again to 10 million barrels per day

Crude oil contracts were also boosted by the lack of progress on the Iran nuclear deal. Recently, the United States said that Iran’s demands to lift sanctions were hindering the process of resuming the 2015 nuclear agreement.

Analysts predict that a nuclear agreement will pave the way for Iran to put oil back on the market. This could lead to an increase in oil supply on the world market of around 1 million barrels per day.

Investors are looking ahead to today’s release of crude oil inventories by the U.S. Energy Information Administration (EIA).

The Spot Market is Open

Wednesday, June 8, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.30

119.75

+0.34

+0.28%

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