Higher supply attitude drags oil prices lower

Oil prices steady lower on Friday, marking weekly flat performance to the downside amid indications of stronger Russian oil supply counterbalancing the better-than-expected rate of US economy’s growth in light of Friday’s PCE data, strong middle distillate refining margins and hopes of a quicker recovery of China’s demand levels.

WTI crude oil lost $1.33, or 1.6 %, to settle at $79.68, 2% lower on the week, whereas Brent futures settled down 81 cents, or 0.9%, at $86.66 per barrel, up just 3 cents from last week’s reading. Oil shipments from Russian ports on the Baltic are expected to surge by 50% in January from the previous month as sellers attempt to meet strong demand in Asia and benefit from soaring global energy prices.

Urals and KEBCO crude oil shipments from Ust-Luga, closer to the Estonian border, over Feb. 1-10 could rise to 1.0 million tons from 0.9 million in the plan for the same period of January. If Russian supply continues to be strong into February, oil could continue to trend lower.

In China, critically ill COVID-19 cases are down 72% from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped by 79% from their peak, pointing to a normalization of the Chinese economy and boosting expectations of the recovery of oil demand.