Oil Prices Dipped a Bit

Tuesday’s volatile trading saw oil prices edging lower as weak Chinese demand data, and a bleak economic outlook weighed.

Brent crude futures had dropped 46 cents, or 0.54%, to $85.45 per barrel. At $79.88, U.S. WTI crude had fallen 38 cents or 0.47%.

While Brent lost $1 in earlier trading, both contracts increased by more than $1.

Since their recent lows, Brent and WTI have increased by almost 15% as traders continue to factor in growing Chinese demand.

The Chinese government has increased the first refined oil product export quotas for 2023. As the world’s largest crude importer fought off waves of COVID-19 infections, traders explained the rise in prices as being due to expectations of weak domestic demand.

More bad news: Factory activity in China fell in December as a surge in COVID-19 infections disrupted production and hit demand after Beijing largely lifted anti-virus restrictions.

The U.S. Fed’s December policy meeting will take place on Wednesday, and the market will watch for signs.

U.S. payroll data are due on Friday, and these figures will confirm that the labor market is still tight.

Russian Gas Exports to Countries Outside

According to data provided on Monday by gas giant Gazprom, Russian gas shipments to countries outside a group of former Soviet republics decreased by 45.5% in 2022.

In contrast to 2021, according to a statement from Gazprom, exports to countries outside the Commonwealth of Independent States (CIS) totaled 100.9 billion cubic meters.

Europe used to be Gazprom’s primary export market, but sanctions enacted in response to Russia’s offensive in Ukraine in 2022 have significantly reduced supplies.

The head of Gazprom, Alexei Miller, stated that the company had gradually increased supplies to China throughout the year but did not specify the amounts.

However, Russia started trying to create new fields and construct the Power of Siberia pipeline around ten years ago to supply the rapidly expanding Chinese market.

Gas from eastern Siberia is already being sent to China via the first Power of Siberia pipeline, which started operating at the end of 2019. Moscow has announced the construction of Power of Siberia 2. Gazprom, which generates 11% of the natural gas used globally, is the owner of the greatest gas reserves in the world.