- Oil continues to trade range-bound amid optimism for a demand rebound
- March ’23 WTI gained 47c this morning to trade above $79/Bbl
- Prices came under pressure after yesterday’s bearish EIA report, which included a larger-than-expected build of 16.3 MMBbl
- Prices were supported by OPEC and the IEA's bullish demand projections, which cited China's reopening
- IEA forecasts that Chinese demand will rise by 0.9 MMBbl/d this year, which is almost half of the global demand growth
- Meanwhile, air travel in China recovers following Lunar New Year as the country steadily reopens
- The possibility that the Fed may aggressively raise interest rates, which would weaken oil demand, continues to weigh on crude prices
- Major oil producers, including Hess Corp and Petronas, lock in hedges to protect against price risk as the latest indication that markets are stabilizing following a volatile year (Bloomberg)
- Hess Corp said that the company purchased US crude options contracts for 75,000 Bbl/d at an average monthly floor price of $70/Bbl
- Hess, in contrast, doubled the cost of entering the deal last year by spending more than $300 million to unwind parts of its hedge
- As recession fears still persist, the return of hedging flows has major consequences for companies that are protected against big price drops
- Also, it indicates that the futures market is becoming more liquid, which will increase trading activity and reduce price volatility
- Hess Corp said that the company purchased US crude options contracts for 75,000 Bbl/d at an average monthly floor price of $70/Bbl