Crude oil prices were on the climb today, set for a weekly gain on signs of strong demand coming from economic reports in key markets.
If the week does end with an overall gain, it would be the first one in three weeks, according to Reuters.
"WTI crude oil prices seem to have found a near-term floor/support at around US$78.40/barrel after a 9%+ decline from 26 April in the past week due to several encouraging factors such as two consecutive weeks of decline in U.S. crude oil stockpile and more upcoming 'piecemeal' stimulus measures from China," OANDA analyst Kelvin Wong told the publication.
China reported inflation of 0.3% for April earlier this week, which was taken as a sign of strengthening economic growth despite perceived challenges in the real estate sector. Earlier today, Beijing also released data showing a 2.3% annual increase in retail sales for April, along with a 6.7% expansion in industrial production for that month. Both are positive numbers that may add to the bullish case for oil.
In the United States, meanwhile, the latest inflation report showed a smaller-than-expected increase in consumer prices, boosting expectations of rate cuts and supporting oil prices. At 3.4%, the annual rate of inflation was still considerable but on a monthly basis the rise was 0.3% rather than the 0.4% analysts had predicted, spurring optimism. Two consecutive weeks of crude oil inventory declines, as reported by the Energy Information Administration also helped prices.
Meanwhile, the International Energy Agency revised its forecast for global oil demand down, just days after its head, Fatih Birol called on OPEC+ to be careful about withholding supply because a deficit would fuel global inflation.
In its latest monthly report, the IEA revised its demand outlook by 140,000 barrels daily, to a total 1.1 million bpd in new demand this year. The agency cited weak demand in developed countries.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
And most of these data is coming from China as manifested by a projected economic growth of 5% in 2024, a rise of 6.7% in industrial production in April and also 2.3% rise in retail sales.
It is becoming blatantly obvious that China in particular and the Asian economies will continue to drive both the global economy and oil and energy demand well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert