Since the beginning of October, the price of a barrel of Brent crude oil has mainly fluctuated between 60 and 65 US dollars. This is unlikely to change next week, as factors supporting prices are likely to balance and weigh on each other. At the beginning of the week, China’s crude oil imports were particularly important, noted Barbara Lambrecht, commodities analyst at Commerzbank.
China’s oil imports remain strong amid rising diesel price differentials
“According to the International Energy Agency, Chinese oil demand this year is likely to be only 100,000 barrels per year higher than last year, but crude oil imports in the first 10 months were 400,000 barrels per day higher than in the same period last year. We expect imports to remain high in November. Some of this will likely continue to flow into the buildup of strategic reserves. Recently, very high price differentials in the diesel market have provided a strong incentive for crude oil. So we assume that imports have been very strong as well. In November it will support prices.”
“On the other hand, new forecasts from energy agencies over the next week are likely to weigh on prices. Although no major corrections are expected, they will continue to point to an oversupply in the oil market next year. Last month, the EIA revised its oil price forecasts slightly higher. This is mainly due to tougher sanctions against Russia and rising inventories in China. Rising prices and a recent surprise increase in production were decisive factors in raising US production forecasts slightly (see figure). It is questionable whether there will be further rise. Corrections will follow.”
