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The price of oil rebounded This Thursday, January 5, 2023, after two days of heavy falls, driven by purchases at a good price and oil pipeline problems in the eastern United States.
Although the market continues pessimistic about the demand for crude oil, the price of a barrel of Brent North Sea, for March delivery, gained 1.09% to close at $78.69 in London.
Meanwhile, the barrel of West Texas Intermediate (WTI), for February, it rose 1.13%, trading at $73.67 in New York.
“It is only a technical rebound, after the losses of the first days of the year“, summed up Andrew Lebow of Commodity Research Group.
On Tuesday 3 and Wednesday 4 January, the WTI yielded more than 9% and touched a minimum in more than a year.
For the analyst Lebow, the suspension of operations in an oil pipeline between Greensboro (North Carolina) and Linden (New Jersey), influenced the bullish behavior of the day.
The decision to halt operations came after a leak near Danville, Virginia.
Only on Saturday, January 7, 2023, will the pipeline be operational again.
The market paid little attention to the weekly report of commercial reserves in the United States released by the US Energy Information Agency (EIA) on Thursday, which gave mixed figures, according to Mizuho’s Robert Yawger.
That report reported an increase in commercial inventories that is largely due to a decrease in the utilization rate of refineries, at 79.6%, a 22-month low, well down from 92% last week.
According to Yawger, this difference is due to the effect of the winter storm Elliot at the end of December 2022 in the United States, which caused disturbances in several refineries, in particular in the state of Texas.
This Thursday’s report also showed a brutal drop in the demand for refined products in the United States, of 20% over the immediately preceding week.
This fall is particularly evident in the case of the gasoline (-19%) and distilled products, which include among others the domestic heating fuel (-28%).
For Lebow, despite Thursday’s rally, “the direction of the market is still downwards“, in a context of resurgence of covid-19 in China and the prospect of a Federal Reserve (Fed, central bank) that continues to bet on the rise in interest rates to contain consumption and inflation transitively.
AFP
