Oil bounces as China, U.S. data ease recession fears
Oil prices rebounded from multi-month lows on Monday as investors’ appetite for US jobs data and China’s exports data improved, and recession fears eased.
Brent crude futures had risen 81 cents, or 0.9%, to $95.73 a barrel by 0638 GMT. U.S. West Texas Intermediate crude was at $89.76 a barrel, up 75 cents, or 0.8%.
Both contracts rose on Friday after job growth in the US, the world’s largest oil consumer, unexpectedly accelerated in July. On Sunday, China also surprised markets with better-than-expected export growth.
SPI Asset Management, Chief Executive Officer, Steven Innes said signs of weak demand for U.S. inventories over the past week fueled trading with a weak outlook. But the employment and export data somewhat reversed that view, he added.
Front-month Brent prices last week hit the lowest levels since February, tumbling 13.7% and posting their largest weekly drop since April 2020, while WTI lost 9.7%, as concerns about a recession hitting oil demand weighed on prices.
China, the world’s largest oil importer, imported 8.79 million barrels per day (bpd) of crude in July, up from a four-year low in June, but still down 9.5% year-on-year.
China’s overall exports gained momentum, but Chinese refiners shed inventories amid high oil prices and weak domestic margins.
Reflecting lower U.S. gasoline demand, and as China’s zero-COVID strategy pushes recovery further out, ANZ lowered its oil demand forecasts for 2022 and 2023 by 300,000 bpd and 500,000 bpd, respectively.
Oil demand for 2022 is now estimated to increase by 1.8 million bpd year-on-year and settle at 99.7 million bpd, just short of pre-pandemic highs.
Exports of Russian crude oil and petroleum products continue to flow despite the imminent European Union embargo that will take effect on 5 December.
In the United States, energy firms last week cut the number of oil rigs by the most since September. It was the first drop in 10 weeks. [RIG/U]
The U.S. clean energy sector got a boost after the Senate passed a $430 billion bill on Sunday, among other things aimed at tackling climate change.