Gains capped by weak outlook for demand as China's economy stutters
20 July 2023 - 13:18
by Agency Staff
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Oil prices crept higher on Thursday as a lower-than-expected drop in US crude inventories and a weaker demand outlook kept investors cautious.
September Brent futures climbed 6c, or 0.1%, to $79.52 a barrel by 9.29am GMT, while August West Texas Intermediate gained 21c, or 0.3%, to $75.56. The August WTI contract expires on Thursday, though, and the more active September WTI crude was 8c, or 0.1%, higher at $75.37.
Prices fell in the previous session after data showed US inventories declined less than analysts had expected.
“Yesterday’s US EIA [Energy Information Administration] oil stock report proved something of a disappointment for those that were looking for inspiration,” PVM Oil analysts said.
China’s economic recovery after authorities ended Covid-19 curbs has fallen short of expectations. Its oil imports surged by almost half year on year in June, but stock levels also rose to near an all-time high. Traders said China had been pragmatically buying discounted Russian crude.
Opec and the International Energy Agency have said China’s demand is expected to continue to rise in the second half of this year and remain the main driver of global growth.
The country’s imports of crude from Russia hit an all-time high in June, Chinese government data published on Thursday shows, even as discounts against international benchmarks narrowed.
Crude prices may struggle to find a clear direction given a mixed global demand outlook in the next few weeks, Citi analysts said in a note.
Demand is “a mixed picture with stronger gasoline [petrol] and jet fuel demand, but weaker petchems and diesel”, the analysts said.
Brent crude prices have broken through to a higher range this month after being stuck at $72-$78 in May and June, the Citi analysts added, after Saudi output cuts and geopolitical risks supported demand.
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 prices edge higher on us stockpiles data
Gains capped by weak outlook for demand as China's economy stutters
Oil prices crept higher on Thursday as a lower-than-expected drop in US crude inventories and a weaker demand outlook kept investors cautious.
September Brent futures climbed 6c, or 0.1%, to $79.52 a barrel by 9.29am GMT, while August West Texas Intermediate gained 21c, or 0.3%, to $75.56. The August WTI contract expires on Thursday, though, and the more active September WTI crude was 8c, or 0.1%, higher at $75.37.
Prices fell in the previous session after data showed US inventories declined less than analysts had expected.
“Yesterday’s US EIA [Energy Information Administration] oil stock report proved something of a disappointment for those that were looking for inspiration,” PVM Oil analysts said.
China’s economic recovery after authorities ended Covid-19 curbs has fallen short of expectations. Its oil imports surged by almost half year on year in June, but stock levels also rose to near an all-time high. Traders said China had been pragmatically buying discounted Russian crude.
Opec and the International Energy Agency have said China’s demand is expected to continue to rise in the second half of this year and remain the main driver of global growth.
The country’s imports of crude from Russia hit an all-time high in June, Chinese government data published on Thursday shows, even as discounts against international benchmarks narrowed.
Crude prices may struggle to find a clear direction given a mixed global demand outlook in the next few weeks, Citi analysts said in a note.
Demand is “a mixed picture with stronger gasoline [petrol] and jet fuel demand, but weaker petchems and diesel”, the analysts said.
Brent crude prices have broken through to a higher range this month after being stuck at $72-$78 in May and June, the Citi analysts added, after Saudi output cuts and geopolitical risks supported demand.
Reuters
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