Chinese Economy, Declining Petroleum Inventories Juice Markets
July 21, 2023
WTI and Brent crude oil are flirting with their 200 day moving averages. There has been no decisive move yet, but this morning with a strong push higher they are trading above those 200 day moving averages and if they can close above them it should offer more buying next week.
China’s discussion of stimulating its economy has been helping to support prices, as well as, the continued decline of petroleum inventories, and no recession. These same stories have been in the news for a while now but are offering more juice to the market this morning. Also helping prices to move higher today are reports from the International Energy Agency (EIA) and OPEC that China’s demand is expected to continue to rise in the second half of the year and be the main driver of demand growth. All this supportive news looks like it will result in the fourth weekly gains for oil prices.
Russia has continued to sell it crude oil despite sanctions and India and China have been the big buyers of this crude at discounted prices. But now as supplies tighten the discount between Russian crude and others is narrowing.
The Federal Reserve meets next week.
Distillate stocks are at their lowest level for this time of year since 2024, leaving out last year. They are 21 million barrels below the 10-year seasonal average up from 27 million barrels below the 10-year seasonal average last year. Low inventories have been a concern for some time now, but the flip side of this story is if the economy disappoints, and demand is soft.