Peter Nurse   

Investing.com — Thursday’s stabilization of oil prices was due to earlier gains. This occurred after China cut its first crude import allocations in 2019. It is a result of a reduction in demand coming from China which is the world’s largest crude exporter. 

At 9:05 am ET (1405 GMT), the futures had traded 0.1% lower at $76.66/barrel and rose 0.1% from $79.28 to $79.28.

U.S. The price of gasoline RBOB futures was largely flat at $2.2677 per gallon.

Beijing approved crude imports to 42 private refiners during the 2022 first round of allowances. This is a 11% decrease from the previous year. 

According to Wednesday’s data from Energy Information Administration (roughly in line with Tuesday’s report), the market posted gains earlier in the week. Data showed that U.S. crude oil inventories dropped by 3.6 Million barrels during the week ending Dec. 24. 

Gasoline and distillate inventories also fell, indicating demand remains strong despite record Covid-19 cases in the United States, the world’s largest consumer.

As demand is back at pre-pandemic levels, crude oil will see gains between 50-60% in 2021. Top producers are taking a cautious approach to returning production to the market.

This places the emphasis on the Organization of the Petroleum Exporting Countries, its allies, including Russia. Next week, they will be meeting to review production policy for the year 2022.

Another factor that could influence the oil price moving into the new year is risk sentiment, particularly regarding Russia’s intentions toward Ukraine.

In an effort to calm tensions, U.S. President Joe Biden will speak with Russian President Vladimir Putin later Thursday. The U.S. accused Moscow of planning to invade Eastern Europe, and pointed to the recent massing of hundreds of thousands near the Ukraine border over the last two months.

“Europe and the U.S. are concerned that Russia may exert further military influence over Ukraine, and this has led to talk of potential oil and gas sanctions,” said Ellen Ward, president and founder of Transversal Consulting, an energy and geopolitics firm.

“Amidst this situation, it must be noted that Russia is the primary supplier of for Europe, which it has been curtailing. Less Russian natural gas in Europe leads to greater use of oil as a power generating fuel.”