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The oil has risen with expectations of a decline of the US inventories

The oil has risen with expectations of a decline of the US inventories… optimism in the market owing to a Stimulus package

The oil has risen with expectations of a decline of the US inventories:
Six analysts, who sought views by Reuters, estimated that crude oil inventories declined by 300,000 barrels in the week ending on 15th January,
but they expected oil inventories to rise by 3.0 million barrels. 

Distillate inventories, which include diesel, heating oil, and jet fuel, increased by 800,000 barrels a day.

Today, traders are waiting for the office tomorrow’s data issued by the American Petroleum Institute (IEA) related to inventories and Energy Information Administration.

On the other side, the International Energy Agency (IEA) announced in its latest report on the oil market its expectations
that oil demand for this year will not recover by 300 thousand barrels of crude oil a day to 5.5 million barrels.

 After reaching the highest level of 8.8 million barrels a day in 2020 due to the Coronavirus.

Moreover, the IEA expects average crude oil demand for this year to reach 96.6 million barrels a day.

The weekly Fluctuations in oil prices.

On Monday at 9:14 AM according to the Eastern Time (ET), West Texas Intermediate (WTI) crude oil prices decreased by 0.15% at $ 52.30,
and Brent crude was trading down by 0.29% at $ 54.97, with a decrease in prices of about $ 2 a barrel in comparison to midweek ending on 17
th January.

At midday, the price of West Texas Intermediate crude (WTI) rose by (0.40%) to $ 52.57 a barrel,
while Brent crude oil traded higher by (1.06%) to $ 55.33 a barrel on the New York Stock Exchange. 

On Tuesday, starting at 10:39 AM according to the Eastern Time (ET),
West Texas Intermediate Crude (WTI) rose by 0.92% to settle at $ 52.80,
and Brent crude rose by 1.92% to settle at $ 55.80. 

The development in US crude oil exports

US crude oil exports averaged 3.2 million barrels a day in 2021, after decreasing in December to 2.9 million barrels a day.

Crude oil exports to Europe increased this week by 65%, reaching 680,000 barrels a day.

It is expected that a withdrawal of crude oil inventories in the United States to continue amid flat exports.

Factors impact the Oil Market this week.

Oil markets suffered from a decline in prices at the start of the week,
influenced by the US dollar and the countries that are still suffering from the daily rise in Coronavirus cases.

Because closures have increased in Europe, vaccination programs have slowed in many countries,
and vaccination programs are expected to continue for months. Germany,
on Tuesday, extended the closure of most stores and schools for another two weeks, until 14
th February.

Early on Tuesday, oil markets recovered from the decline, as US Treasury Secretary Janet Yellen promised,
in a session, she confirmed in the Senate Finance Committee that she would try to support the rebound of the US economy.

The weakness of the US dollar also contributed to the rise in the price of Crude Oil.

As the dollar fell from its highest monthly level on Tuesday morning, this weakening makes crude oil cheaper against other currencies,
she accepted US Treasury Secretary Janet Yellen’s promises that a major stimulus package would support the growth of the US economy, which the world’s largest, this year.

New in the oil market for today

In early trading, on Wednesday, oil prices rose by 0.56%, adding to gains through the night, amid expectations that the upcoming US Administration
will start immense stimulus spending to further stimulate demand for fuel and declining crude oil inventories.

Also, US West Texas Intermediate crude futures rose 23 cents, which is by 0.4%, to $ 53.21 a barrel, up 1.2% on Tuesday.

Brent crude futures rose 25 cents, which is 0.5%, to $ 56.15 a barrel, up 2.1%.

Statements about the instability of the oil market this week

Tim Gould, head of the Energy Supply and Investment Outlook section at the International Energy Agency,
warned that the oil industry is facing major challenges from the Coronavirus, which has caused the oil market to fluctuate.

Gould told Reuters that oil producers must now take many variables into account in their plans,
including economic expectations and the different speeds at which vaccines are used in different countries.

On early Tuesday, Saxo Bank, in a commentary on the market, said that crude oil prices are holding well and not penetrating any descending levels
that might indicate a deeper correction in the short term.

The International Energy Agency (IEA) and the oil market

While the International Energy Agency (IEA) lowered its expectations for the recovery in oil demand for
this year by 300,000 barrels a day to 5.5 million barrels per day,
the agency indicated in the oil market report that “the vaccination efforts are widespread and the acceleration of economic activity
is expected to lead to stimulate stronger growth in the second half of the year.”

The International Energy Agency (IEA) also said: “It is likely that more oil will be needed,
given our expectations of a significant improvement in demand in the second half of the year.” 

With regard to supplies, the International Energy Agency (IEA) expected recovery of more than one million barrels a day, most of which would come from OPEC members,
after supplies decreased last year by 6.6 million barrels a day. 

The International Energy Agency attributed its expectation of supply and demand growth to the introduction of Coronavirus vaccines in most parts of the world.

However, the Agency stated that the rebound in demand will be slow owing to renewed or extended lockdowns in some countries, which of course affects fuel demand.

The agency attributed the gratitude to OPEC for accelerating the withdrawal of global oil inventories,
indicating that if the cartel achieved a rate of 100% compliance with the production limits which it imposed on itself,
the decline could reach 100 million barrels during the first quarter of the year alone.

But if demand rebounds with the same strength that the International Energy Agency expects during the second half of the year,
this could lead to market incapacitation if OPEC goes on to restrict production.

Nevertheless, the report noted, “OPEC has taken a more flexible approach to manage the market and will monthly meet to decide on production levels.”

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