Oil rebounds on US crude stock drawdown and increase in Chinese imports
Oil prices climbed on Thursday as the decline in U.S. crude inventories and increased Chinese imports fueled optimism for demand growth in the world’s two largest crude-consuming countries.
Brent crude futures for July gained 55 cents, or 0.7%, reaching $84.13 a barrel at 1255 GMT. U.S. West Texas Intermediate crude for June rose 62 cents, or 0.8%, to $79.61 per barrel.
“Oil markets were lifted by a larger-than-expected drawdown in U.S. inventory data, while the improved China trade balance data added to the upward momentum,” noted independent market analyst Tina Teng.
The Energy Information Administration reported that U.S. crude inventories, the largest oil user globally, dropped by 1.4 million barrels to 459.5 million last week, exceeding analysts’ expectations of a 1.1 million-barrel decrease.
Stockpiles decreased as refinery activity increased by 307,000 barrels per day (bpd) during the period.
China, the world’s largest oil importer, received 44.72 million metric tons of crude in April, approximately 10.88 million bpd, according to customs data released on Thursday. This marked a 5.45% increase from the previous year.
“The notable recovery in oil prices was also bolstered by faint hopes of a ceasefire between Israel and Hamas,” said Tamas Varga of oil brokerage PVM.
Hamas declared on Wednesday that it was unwilling to make further concessions to Israel during ceasefire negotiations for Gaza, although talks continued in Cairo.
Just a few hours prior to Hamas’ statement, the U.S. indicated the two parties were not far apart.
“While there may be short-term relief for oil prices, returning to April’s high above $90 per barrel may prove challenging due to the peak in geopolitical tensions,” explained IG market strategist Yeap Jun Rong.
Additionally, investors considered data indicating that U.S. jobless claims rose more than anticipated last week as the labor market steadily eased, suggesting two possible rate cuts from the Fed starting in September of this year.
