By Innocent Obasi & Onome Amuge
Numbers on the oil price chart jumped to their highest in three weeks and signalled the return to bullish conditions in 2023 as oil prices responded positively to the driving forces in the global market.
As of Wednesday morning,Brent, the benchmark for two thirds of the world’s oil, was up 0.1 per cent to $84.42 per barrel at, while West Texas Intermediate (WTI), the gauge that monitors US crude, gained 0.1 per cent to $79.63 per barrel.
Market data showed that the surge was buoyed by China’s rising demand as the world’s largest importer loosened the knots on its Covid-19 restrictions. China’s Covid-19 restrictions via its “zero-Covid” policy had, beforehand, had a bearish impact on oil due to the resultant dip in demand.
However, the country’s easing of its stringent policy following widespread protests, has boosted demand as transportation begins to rise. China’s reopening has also prompted intensified trading in oil futures.
Also lending strength to oil prices were concerns that winter storms were affecting production as top consumers,U.S battles winter storms.
Recently, reports showed that a massive storm that spanned at least 2000 miles hit both Canada and the U.S,with every region spanning from Texas to Quebec,experiencing strong winds, and temperatures that have only ever been experienced in the Arctic.
The intensity of the snow bomb code-named Elliot, which brought temperatures of -50 degrees Celsius in some U.S. and Canadian states, not only impacted about 250 million people,the severely low temperatures also resulted in the temporal shut down of over 1.5 million barrels of daily refining capacity along the U.S. Gulf Coast, making shipping and refining operations a herculean task. Bloomberg estimates further showed that over 1.8 million barrels per day of Texas’s oil-processing capacity have been disrupted by the freezing conditions.
Although it is not expected that these output losses would last, they have increased fuel prices, analysts said.
The storm also affected TC Energy Corp., the pipeline’s operator, which caused a further delay in the start-up of operations in the US following the polluting 14,000-barrel oil spill in rural Kansas.
According to Hyde Energy ltd, the ongoing delay in reopening the ruptured pipeline is what caused a $5 per barrel price rise as of last week. Major providers of transportation gasoline like Total Energies, ExxonMobil, LyondellBasell, Valero, Motiva, and Marathon were all impacted by the storm that surrounded the Houston region.
Prior to the recent development, oil prices had plunged to their worst weekly decline in months in early December as concerns about a global economic slowdown weighed on the short-term outlook. However, crude oil prices are currently about 15 per cent above the early December dip.
