Oil gains again as Chinese factory figures please markets

London — Oil edged higher on Thursday, though gains made on signs of a strong economic rebound in top crude importer China were kept in check by fears about the effects of potential increases to European interest rates.

Brent crude futures rose 43c, or 0.51%, to $84.74 a barrel by 10.17am GMT. US West Texas Intermediate (WTI) crude futures were up 45c, or 0.58%, at $78.14.

Manufacturing activity in China grew at the fastest pace in more than a decade in February, data showed on Wednesday, adding to evidence of a rebound in the world’s second-largest economy after removal of strict Covid-19 curbs.

China’s seaborne imports of Russian oil are set to hit a record high in March as refiners take advantage of cheap prices.

However, the market was pressured by growing expectations of rate increases by the European Central Bank (ECB) after faster-than-expected acceleration in consumer prices in France, Spain and Germany.

Eurozone inflation rose to a higher than expected annual rate of 8.5% in February, according to a first estimate from the EU’s statistics agency.

“Resurfacing inflation worries contributed to the souring mood,” said PVM Oil analyst Tamas Varga. “Persistent inflation anxiety will act as a break on a prolonged rally in the immediate future.”

In the US, a tenth consecutive week of crude stock builds also weighed.

Record exports of US crude oil, however, kept the build smaller than in recent weeks, the Energy Information Administration said. 

Reuters