Brent rose by 2.7% as a strong increase in Chinese demand is expected – U.S. crude oil inventory falls more than expected

Crude oil futures closed more than 2% higher on Wednesday (Dec. 21), supported by an unexpectedly sharp drop in U.S. crude inventories.

  • WTI crude futures rose $2.06, or 2.7%, to settle at $78.29 a barrel.
  • BRENT crude futures rose $2.21, or 2.76%, to settle at $82.20 a barrel.

Crude oil futures rose after the U.S. Energy Information Administration (EIA) announced that U.S. crude oil inventories fell by 5.9 million barrels last week. That was 1.7 million barrels more than analysts had expected. The American Petroleum Institute (API) reported that U.S. crude oil inventories fell by 3.1 million barrels last week.

The market was also driven by hopes that the Chinese government will further relax COVID-19 control measures and reopen the country soon after reporting no further COVID-19 deaths. S&P Global forecasts that world crude oil prices will reach $121 per barrel when China resumes full opening, which will significantly boost market demand. Chinese oil demand is expected to reach 15.7 million barrels per day in 2023, up about 700,000 barrels per day from 2022 levels.

The Saudi energy minister said that OPEC and OPEC+ countries had decided to cut production. He said it was the right decision to stabilize the market and the oil industry. However, the decision was heavily criticized by the U.S. and the West. OPEC+ held a production policy meeting on Dec. 4 and agreed to cut production by 2 million barrels per day by the end of 2023, angering the U.S. and the West, which demanded an increase in production.

The Spot Market is Open

Thursday, December 22, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.50

78.66

+0.37

+0.47%

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