Crude oil got shot in the arm boost after US braces for winter storm. Previously bulls took charge after China relaxed its covid policy. Cold weather is expected in the United States, with a storm forecast to bring more than a foot of snow and potential blizzards. In addition to the weather forecast, the latest weekly petroleum report of the U.S. Energy Information Administration also contributed to the oil price rise, by revealing a larger-than-expected inventory draw. Because of chill, demand for crude is also expected to increase for use in heating. If China gets over covid, demand for crude will increase further but demand from China is only expected after first quarter of 2023 as by then Chinese people will start developing herd immunity.
According to reports from OPEC and IEA, crude oil demand is also expected to increase in 2023 compared to 2022. Another reason for crude to see high prices would be reduction in output from Russia. Exports of Russia’s flagship Urals crude blend from the Baltic Sea ports will probably fall to around 5 million tonnes this month from 6 million tonnes in November, thanks to an EU embargo on Russian oil and a Western price cap, according to Reuters calculations. Russia is right now struggling to find enough suitable vessels to redirect Urals to China and India.
