UPDATE 8-Oil's bull run rolls on despite possible China reserves release


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    * Brent crude hits near 2-1/2-month high, set for 4th weekly
    * OPEC+ capacity constraints sharpen focus on limited supply
    * China agrees with U.S. on oil reserves release -sources

 (Updates with settlement prices, technical indicator)
    By Arathy Somasekhar
    Jan 14 (Reuters) - Oil futures settled higher on Friday,
boosted by supply constraints and worries of a Russian attack on
neighbouring Ukraine, pushing prices toward their fourth weekly
gain despite sources saying China is set to release crude
reserves around the Lunar New Year.  urn:newsml:reuters.com:*:nL1N2TU0EJ
    Brent crude futures  LCOc1  settled $1.59, or 1.9%, higher 
at a 2-1/2-month high of $86.06 a barrel, gaining 5.4% in the
    U.S. West Texas Intermediate crude  CLc1  gained $1.70 , or
2.1%, to $83.82 per barrel, rising 6.3% in the week. 
    Both Brent and U.S. futures entered overbought territory for
the first time since late October. 
    "People looking at the big picture realize that global
supply versus demand situation is very tight and that's giving
the market a solid boost," said Phil Flynn, senior analyst at
Price Futures Group. 
    Flynn added that traders did not want to be short in the
market as tensions mounted between Russia and Ukraine and ahead
of a long U.S. weekend for the Martin Luther King Jr Day
holiday, which typically sees lower trading volumes. 
    U.S. officials voiced fears on Friday that Russia was
preparing to attack Ukraine if diplomacy failed. Russia, which
has massed 100,000 troops on Ukraine's border, released pictures
of its forces on the move.  urn:newsml:reuters.com:*:nL8N2TU1LU
    "There has been a bump up in the geopolitical risk factor
that is boosting prices," said John Kilduff, a partner at Again
Capital Management in New York.
    The dollar  =USD  appeared headed toward its largest weekly
fall in four months. A weaker dollar makes commodities more
affordable for holders of other currencies.  FRX/ 
    Several banks have forecast oil prices of $100 a barrel this
year, with demand expected to outstrip supply, not least as
capacity constraints among OPEC+ countries come into
focus. urn:newsml:reuters.com:*:nL1N2TS1D8  urn:newsml:reuters.com:*:nL1N2TS1LB
    Libya's National Oil Corp Chairman Mustafa Sanallah said oil
prices were "expected to continue to rise unless the market
fundamentals change and global investment ... increases," adding
that oil output from the country totalled 1.045 million barrels
per day.  urn:newsml:reuters.com:*:nL1N2TU1RU
    "When you consider that OPEC+ is still nowhere near pumping
to its overall quota, this narrowing cushion could turn out to
be the most bullish factor for oil prices over the coming
months," said PVM analyst Stephen Brennock.
     Issues also remain unresolved in indirect talks between
Iran and the United States on reviving the 2015 Iran nuclear
deal, a source close to the talks said on Friday. If the United
States lifts sanctions on Iran, the country could boost oil
shipments, adding to global supply.
    Sources told Reuters China plans to release oil reserves
around the Lunar New Year holidays between Jan. 31 and Feb. 6 as
part of a plan coordinated by the United States with other major
consumers to reduce global prices.  urn:newsml:reuters.com:*:nL1N2TU0EJ
    The U.S. Energy Department on Thursday said it had sold 18
million barrels of strategic crude oil.  urn:newsml:reuters.com:*:nL1N2TT2ED
    U.S. oil rigs also rose 11 to 492 this week, their highest
since April 2020.  urn:newsml:reuters.com:*:nL1N2TU21I
    China posted its first annual decline in crude oil imports
in two decades, though traders expect imports to recover this
year.  urn:newsml:reuters.com:*:nL1N2TU05K
    Fuel demand was pressured in the world's second-biggest oil
consumer as the Omicron coronavirus variant spread. urn:newsml:reuters.com:*:nL1N2TT01J
Many cities, including Beijing, have urged people not to travel
during the Lunar New Year holiday.

EXCLUSIVE-China agrees with U.S. to release oil reserves near
Lunar New Year -sources     urn:newsml:reuters.com:*:nL1N2TU0EJ
 (Additional reporting by Shadia Nasralla, Noah Browning and
Florence Tan 
Editing by Kirsten Donovan and Mark Potter)
 ((arathy.s@thomsonreuters.com; +91 80 6210 0301; Twitter:

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