Oil prices fall, despite signs of improved China demand

Oil fell, paring earlier gains, as signs of heavy supply, and a rise in U.S. crude inventories countered expectations of higher demand from China.

The American Petroleum Institute reported that U.S. crude stockpiles increased by 6.3 million barrels in the week concluding on Feb. 24, preceding the Energy Information Administration’s official supply data.

Brent crude was at $83.03 a barrel, dropping 41 cents or 0.42%. Correspondingly, U.S. West Texas Intermediate crude decreased 60 cents or 0.72% to 76.46 per dollar.

Russian oil production reached pre-sanction figures for the first time in February, while OPEC production rose in February.

Oil rose earlier in the session, supported by an official index showing China’s manufacturing activity expanded rapidly in more than a decade. The country’s recovery could offset the global slowdown and boost oil demand.

Last month, China’s official manufacturing purchasing managers’ index (PMI) saw an increase, going from 50.12 in January to 52.62. Additionally, the private sector survey indicated that activity also increased for the first time.

Germany’s gas bill

The Federal Office for Economic Affairs analysis has predicted that Germany’s imports of natural gas will double in 2022, despite a 30% decline in total imports.

In February of last year, Moscow’s invasion of Ukraine caused a huge surge in energy prices, causing Germany to search for other sources of energy than those from Russia.

Germany’s import bill rose to 74.12 billion euros from 35.42 billion a year ago, BAFA figures showed.

The average import price in December was 26,050.72 EUR/TJ, equivalent to 9.38 cents per kilowatt hour, and increased by 74.2% compared to the previous year.

Germany bought more gas from European countries and tried to import liquefied natural gas, while mild weather helped dampen demand.