Oil hangs on to recent gains after buoyant Chinese data

Singapore — Oil prices held steady on Thursday, holding on to overnight gains after upbeat Chinese trade data and after US data showed a smaller-than-expected rise in crude inventories and large draws in fuel stocks.

However, the expectation that US interest rate cuts could be delayed capped gains.

Brent crude futures slipped 4c to $82.92 a barrel by 4.32am GMT, while US West Texas Intermediate (WTI) crude futures inched down 1c to $79.12 a barrel despite China’s import and export growth beating estimates.

“China’s trade balance data is a positive sign for the oil market’s demand outlook,” Auckland-based independent analyst Tina Teng said.

However, she added that risk-off sentiment dominated financial markets as stocks are retreating on Wall Street.

The world’s top crude importer posted a 5.1% rise in imports in the first two months of 2024 from a year earlier to about 10.74 million barrels a day (bbl/day), customs data showed on Thursday, as refiners ramped up crude purchases to meet fuel sales during the Lunar New Year holiday.

China’s January-February refined products exports dropped 30.6% on year to 8.82-million tonnes, reducing supplies for global markets.

Upbeat trade data from China, the world’s second-biggest economy, suggests global trade is turning a corner in an encouraging signal for policymakers as they try to shore up a stuttering economic recovery.

Brent and WTI edged up about 1% on Wednesday after crude inventories rose for a sixth week in a row, building by 1.4-million barrels, about two-thirds of the 2.1-million-barrel rise analysts had forecast in a Reuters poll.

Petrol and distillate stocks fell more than expected, the EIA data also showed.

A strong dollar will maintain the status quo in the near term, as markets brace for a risk the US Federal Reserve’s first interest rate cut gets delayed to the second half of 2024, according to a Reuters poll of foreign exchange strategists.

Fed chair Jerome Powell said continued progress on inflation “is not assured”, though the US central bank still expects to reduce its benchmark interest rate in 2024. 

Reuters