Oil prices rose to 8 80/barrel, but vegetable oil prices remain stable

Despite the gradual increase in oil prices, vegetable oil prices remain stable due to low demand from importers, who have created the necessary reserves and are waiting for a new crop of soybeans and soybean oil from South America to enter the market.

February Brent crude futures for the week rose by 5.8% and at yesterday’s session exceeded 8 80/barrel, but at the end of trading they fell to 7 79.4/barrel. WTI crude futures on the New York NYMEX rose 5.2% to 7 76.6/barrel over the week.

The main reason for the price increase was the reduction of oil reserves in the United States for the week of December 18-24 by 3.6 million barrels to the lowest level since September of 420 million barrels, although analysts predicted a decrease of 3.2 million barrels. The news about the mild course of the disease from the Omicron strain also supported the market, although the number of new cases in the United States per day exceeded 500 thousand.

The oil market expects that at the meeting on January 4, 2022, OPEC+ countries will continue the planned increase in production by 400 thousand barrels/day in February, despite the risk of reduced demand due to a new wave of coronavirus.

Vegetable oil prices, which usually react immediately to changes in oil prices, slowed down this week amid low demand and increased supply.

March palm oil futures on the Malaysian stock exchange after rising 3.5% on Tuesday to a two-week high yesterday fell 1.87% to 4,683 ringgit/ton, or вчора 1,120/ton, as traders began to take profits.

Local experts expect palm oil prices to continue to fall under pressure from increased supply and new export data in December.

Additionally, prices are under pressure from the Indonesian government’s forecasts to increase palm oil production in the country in 2022 to 51.01 million tons, which is 2.6% higher than the expected figure of 2021 – 49.71 million tons.

On the Dalian Stock Exchange, soybean oil futures fell by 0.75%, and palm oil futures – by 0.93%.

January soybean oil futures in Chicago for the week rose by 3.6% and are trading at 1 1,250/ton.

Prices for black sea sunflower oil also remain in the range of F 1300-1330/ton FOB, and even slightly increased over the week following the neighboring Palm and soybean oil markets.

A long weekend will reduce trading activity, and the main factor influencing prices in the near future will be the weather in South America.