Commodities

Oil falls on lingering demand concerns in China

Published

6 months ago

July 16, 2024

By Paul Carsten

London (Reuters) -Oil prices declined more than 1% on Tuesday on worries of a slowing Chinese economy crimping demand and despite a growing consensus the U.S. Federal Reserve could begin cutting its key interest rate as soon as September.

futures were down $1.47, or 1.73%, to $83.38 a barrel by 1202 GMT, while U.S. West Texas Intermediate (WTI) crude fell $1.62, or 1.98%, to $80.29.

The weaker Chinese economic data “cast some doubts on whether market participants are being overly optimistic” regarding China’s oil demand outlook, IG market strategist Yeap Jun Rong wrote in an email.

The world’s second-largest economy grew 4.7% in April-June, official data showed, its slowest rate since the first quarter of 2023 and missing a 5.1% forecast in a Reuters poll. It slowed from the previous quarter’s 5.3% expansion, hamstrung by a protracted property downturn and job insecurity.

“Its 2Q GDP and retail sales figures had surprised on the downside by a significant margin, while anticipation for stronger stimulus measures at the Third Plenum may face the risk of disappointment,” Yeap added, referring to a key economic leadership meeting in Beijing this week.

In the U.S., Fed Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter of this year “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion, remarks which market participants interpreted as indicating that a turn to interest rate cuts may not be far off.

Lower interest rates decrease the cost of borrowing, which can boost economic activity and oil demand.

Some analysts cautioned about being overly bullish as expected weakness in some macroeconomic data from the U.S. could still indirectly hurt oil demand in the near term.

“Macro factors are not in favour of higher oil prices in the near term (capped below $85/barrel for WTI crude) due to the prospect of weaker U.S. retail sales for June that are due later today,” OANDA senior market analyst Kelvin Wong wrote in an email.

Commodities

Oil set for weekly gains on colder weather, Chinese policy support

Published

11 hours ago

January 3, 2025

By Enes Tunagur

LONDON (Reuters) -Oil prices held steady on Friday, remaining poised for weekly gains after closing the previous session at their highest in more than two months, underpinned by colder European and U.S. weather and additional economic stimulus flagged by China.

futures were down 9 cents at $75.84 a barrel by 1212 GMT after settling on Thursday at the highest level since Oct. 25. U.S. West Texas Intermediate crude dipped by 6 cents to $73.07, with Thursday’s close its highest since Oct. 14.

Brent was on track for a 2.2% weekly gain while WTI was set for a 3.5% increase.

Signs of Chinese economic fragility heightened expectations of policy measures to boost growth in the world’s top oil importer.

“As China’s economic trajectory is poised to play a pivotal role in 2025, hopes are pinned on government stimulus measures to drive increased consumption and bolster oil demand growth in the months ahead,” said StoneX analyst Alex Hodes.

China announced a couple of new measures to boost growth for its fragile economy this week with a surprise move to raise wages for government workers and announcement of a sharp increase in funding from ultra-long treasury bonds. The additional funding is to be used to spur business investment and consumer-boosting initiatives.

Oil is likely to have gained some price support from expected increased demand for after forecasts for colder weather in some regions.

“Oil demand is likely benefiting from cold temperatures across Europe and the U.S.,” said UBS analyst Giovanni Staunovo.

Also supporting prices this week, stockpiles dropped by 1.2 million barrels to 415.6 million barrels, EIA data showed.

Meanwhile, U.S. gasoline and distillate inventories jumped as refineries ramped up output, though fuel demand hit a two-year low.

Commodities

Russian court tells Yandex to hide images of oil refinery after Ukrainian attacks, TASS says

Published

11 hours ago

January 3, 2025

(Reuters) -A Russian court has ordered internet company Yandex (NASDAQ:) to hide access to maps and photos of one of Russia’s largest oil refineries due to repeated attacks by Ukrainian drones, state news agency TASS reported on Friday.

Yandex, often referred to as “Russia’s Google (NASDAQ:)”, operates the country’s largest search engine and other online services like maps, translate and email, as well as ride-hailing and food delivery.

The court in Moscow ordered Yandex to exclude information about the refinery’s infrastructure from its search results by removing and editing images of workshops, compressor stations and other parts of the plant from Yandex Maps, TASS reported.

It was not clear which refinery the court decision referred to, but TASS said the facility had been attacked four times by Ukrainian drones in 2024.

Ukraine has staged numerous strikes on Russian oil storage facilities and refineries, responding to Moscow’s February 2022 invasion and repeated attacks on Ukrainian cities and infrastructure.

The court’s decision can be appealed. Yandex declined to comment.

The refinery had tried to resolve the issue directly with Yandex before taking the matter to court, TASS said. The claimant argued that the availability of information about the refinery online undermined Russia’s defence capability and negatively impacted the armed forces.

Commodities

Oil prices slipped lower; set for second straight weekly gain

Published

11 hours ago

January 3, 2025

Investing.com–Oil prices slipped slightly lower Friday, but were still heading for a second consecutive weekly gain as optimism around China’s economic growth lifted market sentiment.

At 08:00 ET (13:00 GMT), fell 0.1% to $73.08 a barrel, and expiring in February slipped 0.1% to $75.84 a barrel.

Oil had gained sharply in the previous session after data showed growth in Chinese factory activity.

Both contracts were on course for second consecutive weekly gains, with WTI headed for a 3.5% jump and set to rise nearly 3% for the week.

Chinese stimulus hopes support oil prices

China’s grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.

An official survey released on Tuesday also showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.

Beijing has signaled looser monetary policy for 2025 and has doled out a raft of major stimulus measures since late September, in order to boost its sluggish economy.

China’s central bank has indicated that it plans to lower interest rates from the current 1.5% “at an appropriate time” in 2025, the Financial Times reported on Friday.

Traders assess EIA data amid oversupply concerns

{{8849|US crude oil inventories declined, while gasoline and distillate stocks saw significant increases as demand softened during the week ending December 27, the reported on Thursday.

The EIA stated that dropped by 1.2 million barrels last week, falling short of analysts’ expectations for a 2.8 million-barrel decrease.

Latest EIA surveys have shown that U.S. oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.

This comes amid worries about potential oversupply driven by anticipated production increases from non-OPEC nations, further underscoring an oversupply scenario.

The International Energy Agency recently said that the oil market will remain adequately supplied, despite a rise in demand forecast for 2025.

(Peter Nurse contributed to this article.)