Oil surges on strong Chinese demand
China's stellar import data and calming US inflation fuel a rise in oil prices
Singapore/Washington — Oil prices climbed on Thursday after US inflation and economic data sparked hopes that the Federal Reserve may have fewer rate hikes in store and Chinese trade data showed monthly oil imports were the second-highest on record in June.
Brent crude futures gained 36c, or 0.5%, to $80.47 a barrel by 4am GMT, while US West Texas Intermediate (WTI) crude futures were up 29c, or 0.4%, at $76.04.
US data on Wednesday showed consumer prices rose modestly in June, registering the smallest annual increase in more than two years. Markets expect one more interest-rate rise, but oil traders hope that may be it, because higher rates can slow economic growth and reduce oil demand.
“The lower-than-expected read in US inflation suggests that the tightening cycle from the Fed so far is having its desired effect in moderating pricing pressures,” said Yeap Jun Rong, market strategist at IG, adding this had provided a “risk-on” environment for oil prices.
“Some catch-up gains seem to be at play, with the lacklustre US dollar and some follow-through in China’s stimulus hopes lately providing the catalysts for bearish sentiments to unwind,” Yeap said.
Meanwhile, China’s crude imports in June totalled 52.06-million metric tonnes, or 12.67-million barrels per day (bpd), jumping 45.3% on the year and hitting its second highest monthly figure on record, customs data released on Thursday showed.
Crude oil imports for January-June were up 11.7% at 282.1-million metric tonnes, while refined oil products exports for January-June were up 44.7% at 31.31-million metric tons, customs data showed.
However, sluggish global economic growth, slowing world trade and investment and geopolitical risks continue to affect China’s trade, Lv Daliang, a General Administration of Customs China (GACC) spokesperson, said on Thursday.
Another factor capping price gains was a US Energy Information Administration (EIA) report of a much bigger-than-expected US crude stock build of nearly 6-million barrels last week.
Gasoline inventories remained largely unchanged at 219.5-million barrels during the Fourth of July holiday week, a situation that is “almost unheard of”, said Phil Flynn, an analyst at Price Futures group.
Analysts had expected a big drawdown of gasoline stocks as drivers took to the roads for holiday travel.
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