Despite lingering concerns over a global oil oversupply and weak Chinese economic growth, oil prices reversed losses to edge up early on Monday morning as 73 percent of U.S. Gulf of Mexico oil production was shut-in on Sunday due to tropical storm Barry and Chinese data on Monday pointed to better than forecast industrial figures.
As of 06:08 a.m. EDT, WTI Crude was up 0.22 percent at $60.34, while Brent Crude was trading up 0.37 percent at $66.97.
Gains were limited due to the headline Chinese data released earlier on Monday, showing that China's economic growth in the second quarter of this year was at 6.2 percent, in line with expectations but the weakest growth in the country in 27 years.
China's industrial output and retail sales in June, however, trumped analyst expectations, suggesting that the state of the industry is not as bad as the gloomiest forecasts had it, and that oil demand growth could be supported through the end of the year.
According to analysts at ANZ bank, Chinese crude oil import growth so far this year looks impressive despite fears of a marked economic and oil demand growth slowdown.
"We believe additional crude oil quota (given) to private refiners should keep imports upbeat in H2 2019," Reuters quoted ANZ bank analysts as saying on Monday.
Despite the lowest Chinese economic growth in nearly three decades, industrial data wasn't all that bad and helped oil prices edge up early on Monday morning, with prices additionally supported by the fact that 72.82 percent-or to 1,376,265 bpd-of the current oil production in the U.S. Gulf of Mexico was shut-in as of Sunday in response to the tropical storm Barry.
Phillips 66, which had temporarily closed down its 253,600-bpd Alliance, Louisiana, refinery ahead of the storm, was getting ready on Sunday to restart the refinery on Monday. Most of the Louisiana refineries of major operators were operating normally on Sunday, refinery officials or sources told Reuters.
By Tsvetana Paraskova for Oilprice.com
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Comments
It is very impressive for the world’s largest economy based on purchasing power parity (PPP) and a highly developed economy to boot to achieve a growth rate of 6.2% in the second quarter of this year. Such a growth is not only the envy of the world but it will also consolidate China’s position as the economic driver of the world and the global demand for oil, natural gas and also LNG.
No one should expect China’s economy to continue to grow at 11%-12% per annum as was the case in the 1970s, 1980s and 1990s since the Chinese economy has to a great extent matured since then. Also no one should expect an almost mature economy to grow by such rates. So a growth rate of 6.2% is very impressive indeed when compared with some 2%-2.5% growth for the US economy and 1.5%-2% for the European Union (EU).
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London