- Oil heads for a weekly gain amid hopes of a rebound in Chinese demand
- March ’23 WTI gains nearly $1 this morning to trade around $82/Bbl
- Optimism for a recovery in Chinese demand supported crude this week, reversing some losses from early January
- High refined product cracks due to refinery outages and a weaker US Dollar also supported prices this week
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- OPEC+ delegates meet next week (Feb. 1) to review crude production levels, and sources from the bloc expect the existing output policy to remain unchanged (Reuters)
- Additionally, the EU is in the planning phases for a price cap on Russian fuel products that will go into effect on February 5, along with sanctions
- The EU is mulling a plan to impose a price cap of $100/Bbl on premium Russian oil products like diesel (BBG)
- According to reports, a $45/Bbl cap level is being considered for products that sell at a discount to crude
- The price cap is expected to go into effect on February 5, the same day the EU ban on Russian products would start
- A price cap level will be more formally discussed today, and if EU members are unable to come to an agreement by February 5, the full ban on Russian petroleum products would go into effect, which will likely tighten the diesel and other fuels markets
- Additionally, a coalition led by Estonia, Lithuania, and Poland is pushing to lower the crude oil price cap somewhere between $40 - $50 to curb Russian revenues further