Oil prices rebound on upbeat China, US data

Singapore — Oil prices recovered after a 1% dip in the previous session, on buoyant economic data from China and the US even as the surging pandemic in India capped prices.

Brent crude futures for July were at $68.47 a barrel by 3.38am GMT, up 38c, or 0.6%, while US West Texas Intermediate (WTI) crude for June rose 38c, or 0.6%, to $65.09.

Both Brent and WTI are on track for a second weekly gain as easing restrictions on movement in the US and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand, while pent-up summer travel is likely to give petrol and jet fuel consumption a further boost.

In China, export growth accelerated in April while the services sector expanded, bucking expectations of a slowdown at the world’s second-largest economy, data released on Friday showed.

However, crude imports at the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36-million tonnes, or 9.82-million barrels per day, the lowest since December.

“The import figure isn’t the best,” said economist Howie Lee at Singaporean lender OCBC, adding that a fall in operating rates at independent refiners in the eastern Chinese province of Shandong last month may have caused the decline.

“It is, however, still too early to call for an end to China’s commodity binge, as evident in the import numbers of iron ore and copper,” Lee said.

In the US, the world’s largest oil consumer, jobless claims have dropped, signalling the labour market recovery had entered a new phase amid a booming economy.

However, oil demand recovery has been uneven as surging Covid-19 cases in India has reduced fuel consumption at the world’s third-largest oil importer and consumer.

Resurgence of Covid-19 in countries such as India, Japan and Thailand is hindering petrol demand recovery, energy consultancy FGE said in a client note, though some of that lost demand has been offset by countries such as China where recent Labour Day holiday travel surpassed 2019 levels.

“Petrol demand in the US and parts of Europe is faring relatively well,” FGE said.

“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”

Reuters