Oil was stable as traders waited for fresh signals on the state of Chinese crude demand after the nation ditched Covid curbs.

West Texas Intermediate for March delivery was little changed above $81 a barrel after swinging between gains and losses on Monday. Futures trading volumes are likely to remain subdued during Asian hours, with many investors across the region on breaks to mark the Lunar New Year.

Oil has been driven higher over the past two weeks on expectations that the swift pivot in the world’s largest crude importer may spur daily consumption to hit a record in 2023 as mobility and industrial activity pick up. Traders are also tracking the impact of tighter curbs on Russian energy flows imposed by the European Union and the US following the invasion of Ukraine.

“Across the barrel, we’re seeing tightness in diesel and gasoline, the market remains jittery ahead of the Russian product sanction,” said Keshav Lohiya, a consultant at Oilytics. He sees “a mixture of fundamental tightening and open interest picking up” as the emerging themes in the market.

“Crude has been the laggard recently,” while products have been strong, with Europe’s diesel market hitting $1,000 yesterday, he said. “Diesel and other products are likely to drag crude up.”

  • WTI for March delivery fell 0.5% to $81.18 a barrel on the New York Mercantile Exchange at 10:15 am in London.
    • Brent and WTI both face resistance at their respective 100-day moving averages
  • Brent for March settlement shed 0.5%, falling to $87.71 a barrel on the ICE Futures Europe exchange.
    • Brent open interest clocked up another gain, taking it to the highest since last February

Later Tuesday, traders will get an insight into movements in US inventories with estimates due from the American Petroleum Institute. Over the past two weeks, nationwide commercial stockpiles expanded by more than 27 million barrels, hitting the highest since June 2021, according to government figures.

© 2023 Bloomberg

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