Oil Prices Drop as China Widens COVID Limits

Oil prices dropped on Friday due to China’s largest importer of crude oil expanding its COVID-19 limitations. However, it should rise this week due to supply concerns before Europe’s impending ban on Russian imports.

After increasing 1.3% the previous day, the price of Brent crude futures fell $1.02, or 1.1%, to $95.94 a barrel at 0635 GMT. At $87.84 per barrel, West Texas Intermediate (WTI) oil futures were down $1.24, or 1.4%. Following an 8.1% increase in 2021, the International Monetary Fund anticipates China’s GDP to fall to 3.2% this year, a 1.2-point revision downward from its April prediction. In a forthcoming key report, OPEC will likely maintain its assessment that global fuel demand will climb for another ten years, longer than many other forecasts predict, despite the growing importance of renewable energy sources and electric vehicles.

On October 31, the Organization of the Petroleum Exporting Countries is expected to update its projections for the long-term crude demand in its 2022 World Oil Outlook. According to the 2021 forecast, the oil demand will level after 2035.

Fuel producers and OPEC, whose 13 members depend on oil revenue, would benefit from another decade or more of rising oil demand, which would justify continuing investment in new supply. Less enthused would-be consumers and governments who advocate for actions to reduce oil use to prevent climate change.

When the epidemic affected demand in 2020, OPEC changed its tune and predicted that consumption would finally slow after years of expecting constant growth. The most recent revision will probably maintain OPEC among the more upbeat analysts of crude demand.


Crude Oil Stocks

After reaching a low during the pandemic in 2022, the energy sector experienced a sharp recovery. Oil supply growth has been halted for the remainder of 2022 and the following year due to the OPEC+ bloc’s intention to reduce market oil supply significantly. This has increased market volatility and stoked worries about energy security.

As 2023 draws closer, many fuel and gas companies are trying to reinvent themselves by emphasizing financial health, implementing capital discipline, addressing climate change, and changing business models.

Shell plc (NYSE: SHEL) also boasts an impressive portfolio of 46,000 gas stations in addition to its daily production of 3.5 million barrels of oil. Additionally, it used the recent oil price rise to reduce its debt by 45%.

Hess Corporation (NYSE: HES), an exploration and production company, buys, transports, produces, and sells crude oil and natural gas liquids. On October 19, Lloyd Byrne of Jefferies began covering Hess Corporation (NYSE: HES) and set a price target of $140.


China National Offshore Oil Corporation

China National Offshore Oil Corporation (CNOOC) reported that its third-quarter net profit increased 89.12% annually.

The net profit nearly doubled to $5.1 billion from $2.75 billion in the third quarter of last year (19.508 billion yuan).

Average realized prices for crude and liquids increased 36.13% year over year to $95.802 per barrel in the third quarter, and average realized gas prices rose by 15.1%, resulting in a 53.7% increase in revenues.

From January to September, CNOOC’s total net production increased by 9.3% year over year to 461.5 million barrels of oil equivalent (BOE), setting a new record. Production from China increased by 6.8%, and net production from abroad increased by 13.5%.

Unaudited oil and gas sales revenue for the first nine months of the year for CNOOC increased by 67.6% year over year to $36.8 billion (265.89 billion yuan), primarily due to higher international oil prices and increased sales volumes.

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