Oil holds firm near 13-week highs, but new lockdowns cap gains
Oil rises after China reports stronger-than-expected exports in May
09 June 2022 - 08:09
by Florence Tan and Jeslyn Lerh
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Singapore — Oil prices held firm near 13-week highs on Thursday after China reported stronger-than-expected exports in May, though new Shanghai lockdown restrictions capped gains.
Brent crude futures for August rose 35c, or 0.3%, to $123.93 a barrel at 4.04am GMT, while US West Texas Intermediate (WTI) crude for July was at $122.35 a barrel, up 24c, or 0.2%.
Both benchmarks closed Wednesday at their highest since March 8, matching levels seen in 2008.
China’s exports jumped 16.9% from a year earlier as easing Covid curbs allowed some factories to restart, the fastest growth since January this year, and more than double analysts’ expectations for a 8.0% rise. Exports were up 3.9% in April.
However, parts of Shanghai began imposing new lockdown restrictions on Thursday, with residents of sprawling Minhang district ordered to stay home for two days in a bid to control Covid-19 transmission risks.
“The export performance is impressive in the context of the country’s multi-city lockdowns in the month,” Stephen Innes, managing partner at SPI Asset Management, said in a note Thursday.
“Still, the apparent negative feedback loop is there is less incentive for the authorities to move away from ‘zero Covid’ soon,” Innes said, adding that this was a bit of a saw-off for oil markets.
Meanwhile, peak summer petrol demand in the US continued to provide a floor to prices.
The US posted a record fall in strategic crude reserves even as commercial stocks rose last week, data from the Energy Information Administration (EIA) showed on Wednesday.
US petrol stocks unexpectedly dropped, indicating resilience in demand for the motor fuel during peak summer despite sky-high pump prices.
“It’s hard to see significant downside in the coming months, with the [petrol] market likely to only tighten further as we move deeper into driving season,” said ING’s head of commodities research, Warren Patterson.
EIA’s data showed that apparent demand for all oil products in the US rose to 19.5-million barrels a day while petrol demand rose to 8.98-million barrels a day, ANZ analysts said in a note.
Efforts by Opec+ oil producers to boost output are “not encouraging”, UAE energy minister Suhail al-Mazrouei said on Wednesday, noting the group was 2.6-million barrels a day short of its target.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil holds firm near 13-week highs, but new lockdowns cap gains
Oil rises after China reports stronger-than-expected exports in May
Singapore — Oil prices held firm near 13-week highs on Thursday after China reported stronger-than-expected exports in May, though new Shanghai lockdown restrictions capped gains.
Brent crude futures for August rose 35c, or 0.3%, to $123.93 a barrel at 4.04am GMT, while US West Texas Intermediate (WTI) crude for July was at $122.35 a barrel, up 24c, or 0.2%.
Both benchmarks closed Wednesday at their highest since March 8, matching levels seen in 2008.
China’s exports jumped 16.9% from a year earlier as easing Covid curbs allowed some factories to restart, the fastest growth since January this year, and more than double analysts’ expectations for a 8.0% rise. Exports were up 3.9% in April.
However, parts of Shanghai began imposing new lockdown restrictions on Thursday, with residents of sprawling Minhang district ordered to stay home for two days in a bid to control Covid-19 transmission risks.
“The export performance is impressive in the context of the country’s multi-city lockdowns in the month,” Stephen Innes, managing partner at SPI Asset Management, said in a note Thursday.
“Still, the apparent negative feedback loop is there is less incentive for the authorities to move away from ‘zero Covid’ soon,” Innes said, adding that this was a bit of a saw-off for oil markets.
Meanwhile, peak summer petrol demand in the US continued to provide a floor to prices.
The US posted a record fall in strategic crude reserves even as commercial stocks rose last week, data from the Energy Information Administration (EIA) showed on Wednesday.
US petrol stocks unexpectedly dropped, indicating resilience in demand for the motor fuel during peak summer despite sky-high pump prices.
“It’s hard to see significant downside in the coming months, with the [petrol] market likely to only tighten further as we move deeper into driving season,” said ING’s head of commodities research, Warren Patterson.
EIA’s data showed that apparent demand for all oil products in the US rose to 19.5-million barrels a day while petrol demand rose to 8.98-million barrels a day, ANZ analysts said in a note.
Efforts by Opec+ oil producers to boost output are “not encouraging”, UAE energy minister Suhail al-Mazrouei said on Wednesday, noting the group was 2.6-million barrels a day short of its target.
Reuters
Market data — June 8 2022
WATCH: Market Report
MARKET WRAP: JSE slips as stagflation hits the radar
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Asian shares lose ground as focus is firmly on ECB
European stocks slide as rate concerns resurface
Freer movement in China pushes oil prices up
Oil rises on anticipation of low US stocks and upcoming driving season
Gold dips as dollar and treasury yields rise
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.