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Oil Soars Break Levels Above $90 per Barrel
Oil Soars Break Levels Above $90 per Barrel
Tuesday, 08 February 2022

Price Performance Indicators

Product

Previous Week

% Change

COFR

 Rp    1322200.00

5.37%

COFU

 $                   92.02

5.35%

CPOTR

 Rp         19505.00

3.06%

WTI

 $                   92.31

6.32%

BRENT

 $                   93.27

3.60%

USD/IDR

 Rp         14381.01

-0.03%

  • In a week (31/1 - 4/2) the price of ICDX’s crude oil rose more than 5 percent.   
  • The highest volatility reached 1.74 percent. 

***************************************************************

Market Review

Crude oil still showed a positive performance at the close of the first week of February, where prices jumped more than 5 percent, breaking through levels above $90 per barrel. The positive trend of crude oil price movements is supported by a number of catalysts that affect the demand and supply sides.

From the supply side, the main focus is on OPEC and its allies, which so far have not shown any signal to add more supplies to the market. In the last meeting, OPEC+ decided to continue increasing production gradually by 400,000 bpd per month. However, a report in January showed that OPEC+ was only able to increase by 210,000 bpd.

Meanwhile, from the demand side, OPEC estimates that globally there will be an increase of 4.15 million bpd in 2022. In addition, the cold weather that hit the US recently made the demand for heating oil increase. In addition, the heating up of tension between Russia and western countries regarding the issue of a potential Russian invasion of Ukraine has sparked fears that gas prices will increase further. According to data from the American Automotive Association (AAA), the national average price of gas in the US reached $3.44 per gallon (7/2), which is also the highest level since 2014. The increase in gas prices will usually also increase the price of crude oil considering its function as a substitute product.


Market View

Nuclear Negotiation Show Positive Signal, Iran is Ready to Boost Exports 

Iran's nuclear negotiations show signs of progress after US President Joe Biden (4/2) granted sanctions relief, allowing Iran to undertake international nuclear cooperation projects. However, the Iranian side is still demanding further waivers, especially regarding the lifting of sanctions on the oil sector.

Iran believes the current condition of oil prices will help push the US to reach a new deal in nuclear negotiations which it plans to resume on Tuesday, the semi-official Iran Fars News Agency said (7/2). Iran's oil production is reported to have increased from an average of 2 million bpd in 2020 to 2.4 million bpd in 2021, and plans to increase to 3.8 million bpd if sanctions are lifted, sources familiar with the matter said.

In addition, Iran's floating oil storage has jumped from about 63 million barrels in early December to 87 million barrels in February, and Iran's onshore storage is currently at 49 million barrels, compared with 66 million barrels at the end of May 2021, data from the analyst company, Kepler. These data indicate Iran's readiness to supply more oil to the market if US sanctions are lifted. 


Eastern Europe Heats Up, Gas Prices Rise 

The issue of an invasion plan by Russia began to emerge after reports that Russia had deployed around 100,000 troops to the Ukrainian border (1/2). This concern is not without reason, because in 2014, Russia had carried out a similar invasion and succeeded in annexing Crimea from Ukraine. The increasing tension has made the US threaten to stop the operation of the Nord Stream 2 gas pipeline if Russia invades Ukraine (7/2).

The geopolitical tensions in eastern Europe have sparked fears of a spike in energy prices, especially oil and natural gas because Russia has the potential to use natural gas and crude oil as weapons to deal with pressure from the west. Russia is the world's second-largest oil producer after the US. In addition, nearly 47% of natural gas supplies to Europe come from Russia. 


WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Date

Data/Events

Actual

Expectation

Previous

09-Feb

USA - API Crude Oil Stocks Change

 

N/A

-1645M

09-Feb

USA - EIA Crude Oil Domestic Production

 

N/A

115M

09-Feb

USA - EIA Crude Oil Stocks Change

 

0675M

-1046M

09-Feb

USA - EIA Gasoline Stocks Change

 

1550M

2119M

12-Feb

USA - Baker Hughes Rig Count

 

N/A

497

Source: ICDX Research

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© Indonesia Commodity & Derivatives Exchange (ICDX)
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