The price of Brent crude ended the week at $87.63 after closing the previous week at $85.28. The price of WTI ended the week at $81.64 after closing the previous week at $79.86.
Additionally, traders of Brent crude increased their net long positions by some 35% by reducing their short positions while adding to their long positions. Likewise, traders of WTI increased their long positions while only reducing their short positions resulting in an increase in the net long positions by around 17%. The net long positions, however, remain at the lowest level since April 2020 at the beginning of COVID-19.
Oil prices have now moved up significantly since the price of Brent crude fell to $77.84 on January 4. We have been forecasting for several months that the price of Brent crude will average $89.25 in 1Q 2023, but prices will be moderated by the supply/demand situation moving towards a slight surplus in 2023.
The latest EIA report indicated that US oil production was 12.2 million b/d, which compares to 11.7 million b/d at the same time of the previous year. The report also indicates that US crude inventories increased by 8.41 million b/d and currently stand at 448 million barrels. In comparison to the same period of the previous year, crude inventories are 34.20 million barrels greater, and are 10.96 million barrels greater than the level of 2019, and are 35.36 million barrels more than in 2018. Outside the US, production has been rebounding in Africa, including Nigeria where oil production reached 1.24 million b/d in December with production reaching 1.52 million b/d at the end of December with the return of Forcados and partial restoration of the Trans Niger Pipeline. The production is the highest level since March of 2022 and an increase of 32% from September of 2022. Iraq is another member of OPEC+ that experienced production growth in 2022 with oil production average 4.62 million b/d in December and 4.61 million b/d for 2022, which compares to 4.20 million b/d in 2021.
From a demand perspective, we are forecasting that global oil demand will increase by more than 2.0 million b/d in 2023 compared to 2022. Demand for gasoline and diesel is forecasted to increase. Jet fuel is also forecasted to increase by nearly 22%, which represents more than 40% of the total increase in demand.
For a complete forecast of refined products and prices, please refer to our Short-term Outlook