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As an oil pipeline connecting Iraq and Turkey was interrupted by the explosion, which further triggered the market's concern about the supply of crude oil, the international crude oil futures price rose in the overnight market, and the 19th was strongly shocked, and the international crude oil futures prices rose significantly at the close.
As of the close of the day, light crude futures for February 2022 delivery on the New York Mercantile Exchange rose $1.53, or 1.79%, to close at $86.96 a barrel. Brent crude futures for March 2022 delivery in London rose $0.93 to close at $88.44 a barrel, or 1.06 percent.
According to media reports, due to the collapse of the power tower, the oil pipeline connecting Kirkuk in Iraq and the port of Ceyhan in Turkey exploded in the city of Kahramanmaras in southeastErn Turkey on the evening of the 18th, resulting in a temporary interruption in crude oil exports. To avoid greater losses, Turkey's Botas oil pipeline was forced to temporarily close the pipeline, through which Iraq's exports of crude oil were directly affected.
However, after several hours of interruption, the pipeline resumed crude oil transportation on the morning of the 19th, which can transport 75,000 barrels of crude oil per day.
Carsten Fritsch, a commodities analyst at Commerzbank, said the pattern in recent weeks has been repeated again, with news of oil supply disruptions significantly pushing up oil prices, but after the oil supply disruptions were resolved, oil prices did not fall back to previous levels.
Edward Moya, a senior market analyst at online foreign exchange trading platform OANDA, said OPEC and its production cut partners are now unable to meet the levels set by production quotas, and if geopolitical tensions continue to heat up, Brent crude futures prices may not need much of a push to reach $100 a barrel.
Vivek Dhar, an energy commodities analyst at Commonwealth Bank, said aviation kerosene consumption was increasing with the growth of international flights, while road traffic was well above the same period last year. OPEC and its production-cutting partners will likely have good support for oil prices in the coming months due to crude oil supply constraints and continued increased global oil demand.
Phil Flynn, senior market analyst at the U.S. Price Futures Group, said on the 18th that the geopolitical problems faced by oil prices are worrying. Last week, tensions between Ukraine and Russia worried the oil market, and oil prices were boosted. Yemen's Houthi armed forces attacked the UAE on the 17th also boosted oil prices.
Survey data released by S&P Global Platts later on the 18th showed that analysts believe that U.S. commercial crude oil inventories fell by 700,000 barrels month-on-month last week, distillate inventories fell by 1.1 million barrels month-on-month, while gasoline inventories are expected to continue to rise by 2.4 million barrels. U.S. refinery operating was expected to be 88.2 percent last week, down 0.2 percentage points month-on-month.
Although OPEC's January oil market report released on the 18th maintained the same growth rate of world oil demand in 2021, it increased the oil growth in the fourth quarter of 2021 due to the better-than-expected fuel demand in the transportation sector of OECD countries, and the growth rate of global oil demand in the third quarter was revised down. The report kept unchanged forecasts that global oil demand would increase by 4.2 million b/d in 2022.
Meanwhile, the report's assessment of supply growth in non-OPEC countries in 2021 and 2022 remains unchanged, but despite the increase in the average daily crude oil production quota for that month by 400,000 barrels, the average OPEC crude oil production in December 2021 actually increased by only 200,000 barrels per day.
Austria's JBC Energy said on the 18th that due to the unlikely implementation of large-scale lockdown measures to deal with the spread of the Omicron mutation virus, the activity area of the spot market looks to have improved, and refiners now believe that the oil demand environment will be stronger than initially feared. A clear manifestation of this is that spot crude oil prices in the Atlantic Basin have risen sharply since the beginning of this year, which shows that despite oil prices reaching the current highs, the demand for crude oil in the market is still strong.
Goldman Sachs' report released later on the 17th predicts that in view of the substitution of oil for natural gas demand, the lower-than-expected supply and stronger-than-expected demand in the fourth quarter of 2021, oil inventories in OECD countries will fall to their lowest levels since 2000 by the summer of 2022, and OPEC's remaining oil production capacity with production-cutting partners will also fall to a record low of about 1.2 million b/d.
Goldman Sachs believes that due to the mild and potentially short-lived impact of the Opichron variant virus on oil demand, the supply gap in the oil market is surprisingly large, and the average price of Brent crude oil futures will reach $100 per barrel in the third quarter of 2022 and rise further to $105 per barrel in 2023.
Flynn said diesel supply is expected to tighten as air travel reopens, global oil demand will rise to near record highs, and market supply will be very tight for some time to come. The biggest concern is how the Fed will respond to inflationary pressures as oil prices rise, and whether rising energy prices will plunge the economy into recession. Source: Xinhua Finance
Source: Xinhua Finance
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