Oil prices were able to return to growth on Thursday. Support was provided by the publication of data on the U.S. economy, where GDP growth in the fourth quarter exceeded analysts’ forecasts – 2.9% against the expected 2.6%. A closer look at the data is not flawed, but the market saw in them a positive and hurried to put it into oil quotations. Recession fears are abating, although there are still risks to demand.

Brent futures are building consolidation above the border of the long descending channel, demonstrating the potential, if not for a rising trend, then at least for stabilization. The nearest resistance zone, the breakdown of which could strengthen optimism, is $89-90 per barrel. If it is passed, it opens up space for a move to the $97 per barrel area.

EUROPE IS LOOKING FOR DIESEL OUTSIDE RUSSIA

In anticipation of the embargo on oil products, which will come into force in 10 days, Europe is actively looking for suppliers of diesel fuel, which accounts for about half of Russian oil product imports. Mostly new shipments are coming from the US and Saudi Arabia, but Russia still accounts for a large share of supplies. As of February 5, shipments from Russia are due to stop.

The impact of the embargo and the price ceiling on oil products is yet to be assessed. Industry experts interviewed by the media say that it may hit Russian refining, and the released volumes of crude may be exported to Asian countries, or leave the market altogether.

Russian companies are looking for new markets for their products, but there is no transparency. How successful Europe will be in finding new suppliers and Russia in finding new buyers will be assessed only in the second half of February. These are the risks that market participants put into quotations.

WHAT TO EXPECT FROM OPEK+

In addition to the embargo, another important event is expected in early February – the OPEC+ meeting. Oil producers will discuss production quotas for the next two months. According to Reuters sources, the alliance members are inclined to maintain the status quo, which is unlikely to have a tangible impact on the current dynamics of quotations.

The IEA estimates that OPEC+ countries are still producing less than the established quota level allows. Russia (-0.71 mln bpd), Nigeria (-0.51 mln bpd) and Angola (-0.36 mln bpd) are lagging behind the most. Across the alliance, the backlog is estimated at 1.77 mln b/s vs. 3.22 mln b/s in October.

If current quotas are maintained in February, this could be a neutral event for the market. In the current environment, hopes for demand growth in China are counterbalanced by concerns over recession in the US. The market forecast from OPEC remained virtually unchanged. Therefore, the market consensus assumes just such a move by OPEC+ members.