U.S. oil prices advanced Wednesday, lifting West Texas Intermediate futures to around $82 a barrel, as the International Energy Agency (IEA) said China's Covid reopening will lead to record oil demand. After a slow start, oil stocks gathered momentum early Wednesday.
On Wednesday, the IEA estimated the recent easing of Covid restrictions in China will boost 2023 global oil demand to record highs. The report from the IEA follows similar forecasts from OPEC — the Organization of Petroleum Exporting Countries. The news sent U.S. benchmark oil and U.K. benchmark Brent crude to their highest levels since early December.
On Tuesday, OPEC Secretary-General Haithan Al-Ghais said he is "cautiously optimistic" about the outlook for the global economy, as a recovery in oil demand in China is tempered by signs of fragility elsewhere, Bloomberg reported. He also said there could be 500,000 barrels per day growth in China in 2023.
"Now everybody is optimistic about China opening up,"- Al-Ghais told Bloomberg. "We are optimistic, but again cautiously optimistic."
Estimates from the Paris, France-based International Energy Agency sees China's reopening will drive global oil demand to a record high of 101.7 million barrels per day (bpd) in 2023, up by 1.9 million bpd from 2022. U.S. oil prices gained around 2% Wednesday, placing West Texas Intermediate (WTI) futures at the highest level since early December.
U.S. crude oil prices have also regained support above their 50-day moving average line, after settling above that line on Tuesday for the first time since mid-November. Between Jan. 3-Jan. 5, WTI prices dropped 9%, to $73.52 per barrel.
U.S. Oil Prices And Oil Stocks
Despite oil prices breaking above resistance Wednesday, oil stocks did not follow suit.
Oil and gas-related stocks were subdued early Wednesday ahead of market trade, not jumping into one of the usual rallies that accompany oil prices advances.
Devon Energy, Marathon Oil and Valero Energy traded highest in early action among energy names on the S&P 500 index, but gains remained less than 1%.
On the IBD 50 list, oil stocks Exxon Mobil, Matador Resources and Valero Energy are basing. Oilfield service firms SLB and Halliburton are also trading below buy points, as is Oneok.
Meanwhile French multinational TotalEnergies is in a buy zone, 5% above a 61.25 buy point.
Among the Dow Jones industrials, Chevron rose 0.8% in early trade, positioning to extend a three-day run up placing the stock to its highest mark since Dec. 5, and 4% below a flat base buy point at 189.78.
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