Oil prices edge higher on mixed US data

A crude oil tanker near the Russian port city of Nakhodka. Reuters

Oil prices climbed more than 1 per cent on Tuesday evening as data showed a mixed picture for the US economy, outweighing Chinese economic growth numbers.

US retail sales rose less than expected in June while factory output declined, according to official data.

Oil prices were steady in the afternoon trading after falling by about 2 per cent on Monday on weak Chinese economic growth data.

Brent, the benchmark for two thirds of the world’s oil, was trading 1.78 per cent higher at $79.90 a barrel at 10.05pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 2.35 per cent at $75.89.

On Monday, Brent settled 1.72 per cent lower at $78.50 a barrel while WTI was down 1.68 per cent at $74.15.

“Oil won’t catch a bid unless China finally unleashes meaningful stimulus that propels large parts of the economy,” said Edward Moya, a senior market analyst at Oanda.

“Little rate cuts here and there, along with support for property markets won’t do the trick for revitalising the China recovery trade.

“If China doesn’t appear strong the global growth outlook will get slashed and that could keep oil prices heavy a while longer.”

Gross domestic product in the world's second-largest economy expanded by an annual 6.3 per cent from April to June, after growing by 4.5 per cent in the previous three months as the country removed Covid-19 restrictions and reopened, according to the latest data released by the National Bureau of Statistics.

However, the pace of growth in the second quarter missed the 7.1 per cent estimate of economists polled by Bloomberg and the 7.3 per cent forecast of those surveyed by Reuters.

Quarterly, GDP growth was only 0.8 per cent between April and June, compared with the previous three months.

The American Petroleum Institute was set to release its weekly US crude inventory data on Tuesday. The official data from the US Energy Information Administration is due on Wednesday.

Economists now expect the European Central Bank deposit rate to rise to 4 per cent, up from the 3.75 per cent previously expected, according to a Bloomberg survey reported on Monday.

While price rises in the 20-nation eurozone is set to moderate in the coming months, it won’t be as quickly as earlier anticipated, the survey said.

Last month, the ECB raised its benchmark interest rate by 0.25 per cent to 3.5 per cent, in its continuing battle to reduce inflation in the eurozone from 6.1 per cent to its 2 per cent target.

Higher interest rates weigh on economic growth, lowering crude demand.

Meanwhile, Russia will reduce its crude exports by 2.1 million tonnes in the third quarter, corresponding to its pledge to cut shipments by 500,000 barrels per day in August.

The decrease in volumes will affect both shipments towards Russian seaports and pipeline supplies, state news agency Tass reported on Monday, citing Russia’s Energy Ministry.

Production at two key Libyan oilfields resumed at the weekend after being shut due to protests, according to media reports.

Operations at the Sharara, El Feel and 108 oilfields were halted last Thursday after tribal leaders protested against the apparent arrest of a former finance minister.

The Sharara field, one of Libya’s largest production areas with a capacity of 300,000 bpd, partially resumed production on Saturday, Reuters reported earlier, citing engineers.