- Brent, US crude reached its highest level since early December
- The G7 is seeking two price ceilings for Russian oil products
- India’s crude oil imports hit a 5-month high in December
NEW YORK, Jan 23 (Reuters) – Oil prices settled mixed on Monday, retreating as investors cashed in on a jump to seven-week highs on optimism about a possible recovery in demand from top oil importer China as the economy recovers into the year from pandemic shutdowns.
Brent crude fell 56 cents higher to $88.19 a barrel. The highest was $89.09 a barrel, the highest since December 1. US West Texas Intermediate (WTI) crude settled 2 cents lower at $81.62 a barrel, off a session high of $82.64 a barrel, the highest since Dec. 5.
Prices pulled back at the end of the session as investors took profits, said Phil Flynn, analyst at Price Futures Group.
Still, the market wants to preserve long positions in case Chinese growth resumes, said Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta.
Data shows a solid increase in travel in China after COVID-19 curbs were eased, ANZ commodity analysts said in a note, pointing out that traffic congestion in the country’s 15 key cities so far this month is up 22% from a year ago.
Crude oil prices in much of the world’s physical markets have started the year with a rally as China has shown signs of more buying and traders have worried that sanctions against Russia could tighten supply.
“While the actual (China) reopening will no doubt prove complicated, especially over the holiday season, early indications are that there has been an uptick in activity, meaning the economy may be performing better,” OANDA analyst Craig Erlam said.
Brent is expected to move back to a range between $90 and $100 as the oil market tightens, Erlam said.
Demand for products has lifted the oil market and refining margins, Flynn said. The 3-2-1 crack spread, a proxy for refining margins, rose to $42.18 a barrel on Monday, the highest since October.
The European Union and the Group of Seven (G7) coalition will impose a price cap on Russian refined products from February 5, in addition to the price cap on Russian crude oil that has been in place since December and an EU embargo on imports of Russian crude oil by sea.
The G7 has agreed to postpone a review of the level of the price cap on Russian oil until March, a month later than originally planned, to allow time to assess the impact of the price cap on oil products.
In India, crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up on discounted Russian fuel amid a steady rise in consumption in the country.
Reporting by Stephanie Kelly in New York; additional reporting by Ron Bousso in London, Mohi Narayan in New Delhi and Sonali Paul in Melbourne Editing by David Goodman, David Gregorio and Mark Potter
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