Oil Prices Rise on Cooling US Inflation, Strong China Trade Data
Shafaq News/ Oil prices edged higher on Thursday, buoyed by encouraging developments in U.S. inflation and economic data, which raised hopes of a potentially reduced number of interest rate hikes by the Federal Reserve. Additionally, Chinese trade data revealed that monthly oil imports in June reached the second-highest level on record, further supporting the market sentiment.
Brent crude futures rose by 0.5% or 36 cents to reach $80.47 per barrel by 0400 GMT, while U.S. West Texas Intermediate crude futures experienced a 0.4% or 29 cents increase, reaching $76.04 per barrel.
On Wednesday, U.S. data indicated a modest rise in consumer prices for June, representing the smallest annual increase in over two years. Although market expectations suggest an additional interest rate hike, oil traders are hopeful that this may be the extent of it, as higher rates tend to impede economic growth and dampen oil demand.
Yeap Jun Rong, a market strategist at IG, noted that the lower-than-anticipated U.S. inflation figures suggest that the Federal Reserve's tightening measures have effectively curbed pricing pressures. He added that this has fostered a "risk-on" environment, benefiting oil prices. Yeap also highlighted that catch-up gains were observed, partially driven by the lackluster U.S. dollar and recent positive developments in China's stimulus efforts, which have contributed to the reversal of bearish sentiments.
Meanwhile, customs data released on Thursday disclosed that China's crude imports in June reached 52.06 million metric tons or 12.67 million barrels per day (bpd), signifying a 45.3% year-on-year surge and marking the second-highest monthly figure on record. Furthermore, the data revealed an 11.7% increase in crude oil imports for January-June, totaling 282.1 million metric tons, while refined oil product exports for the same period saw a significant 44.7% rise, reaching 31.31 million metric tons.
However, concerns persist due to sluggish global economic growth, decelerating world trade and investment, and geopolitical risks, all of which continue to impact China's trade. Lv Daliang, a spokesperson for the General Administration of Customs, emphasized these factors on Thursday.
Moreover, a report from the U.S. Energy Information Administration indicating a larger-than-anticipated build in U.S. crude stockpiles of nearly 6 million barrels last week acted as a constraint on price gains. Gasoline inventories, however, remained mostly unchanged at 219.5 million barrels during the week of the Fourth of July holiday, a scenario described as "almost unheard of" by Phil Flynn, an analyst at Price Futures group. Analysts had initially expected a significant decline in gasoline stocks as a result of increased travel during the holiday period.
