Oil prices experienced on Thursday an increase as a result of somewhat mixed trade data from China. Meanwhile, market participants remained vigilant for any indications of de-escalation in the Middle East.
Brent oil futures, set to expire in July, saw a 0.4 percent rise to reach $83.93 per barrel, while West Texas Intermediate (WTI) crude futures increased by 0.5 percent to $78.96 per barrel at 23:39 ET (03:39 GMT).
Read more: Oil prices slide as U.S. inventories surge, demand weakens
The previous day, prices had risen slightly following data showing a decrease in overall crude inventories. However, the positive impact was offset by an increase in gasoline and distillate inventories.
Additionally, the strength of the dollar prevented significant gains in crude, as several Federal Reserve officials cautioned that interest rates would remain high for an extended period.
According to government data released on Thursday, China’s trade balance for April grew less than anticipated, particularly due to higher-than-expected imports.
Although the surge in imports indicated improved domestic demand and resilience in the Chinese economy, the data revealed a decline in China’s oil imports from 49.1 million tons in March to 44.7 million tons in April.
The import figure remained relatively unchanged compared to April 2023. These statistics suggest that demand in the world’s largest crude importer may be cooling, despite an overall economic recovery.
The Chinese government’s promotion of electric vehicle adoption and ongoing limitations on travel have likely contributed to this trend.
Nevertheless, travel is expected to increase in May with the Labor Day holiday, and Chinese refiners are anticipated to boost production in the upcoming summer months.
Increased non-OPEC+ production to ease supply constraint
Analysts at Macquarie predict that Brent prices will fall below $80 in the near future, citing bearish market fundamentals and a growing anticipation of a ceasefire between Israel and Hamas.
Furthermore, increased production outside the Organization of Petroleum Exporting Countries and its allies (OPEC+) is expected to alleviate supply constraints, while persistently high inflation and long-term high interest rates are likely to dampen demand. However, any potential interest rate cuts later this year could help stimulate demand. The Macquarie analysts also noted that an extension of the ongoing production cuts by OPEC+ would provide relief to oil prices.
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