Oil prices edged up in Asian trade on Monday afternoon, but are on track to record weekly losses, poised to snap a seven-week winning streak, as worries about slowing China’s economic growth and the possibility of a hike in US interest rates outweigh signs. a sign of tight supply.
US West Texas Intermediate (WTI) crude futures gained 22 cents, or 0.3 percent, to trade at $80.61 a barrel by 0611 GMT. Meanwhile, Brent crude futures were up 8 cents, or 0.1 percent, to trade at $84.12 per barrel.
The seven-week winning streak is the longest for either benchmark this year. Brent futures were up about 18 percent and WTI gained more than 20 percent in the seven weeks ended Aug. 11 to their highest in months before trimming some of this week’s gains, when both fell more than 3.0 percent.
The US Federal Reserve’s focus on containing inflation amid stronger-than-expected economic data capped oil prices, which have risen sharply in recent weeks on supply concerns.
The US Labor Department on Thursday (17/8/2023) reported the number of Americans filing new claims for unemployment benefits fell last week, suggesting the still-tight labor market could extend the Fed’s tightening campaign to cool the economy.
The report follows similar upbeat economic data earlier this week, including US retail sales, which suggested the Fed may have to keep higher interest rates on hold for longer.
Investors are concerned that higher borrowing costs could stifle economic growth and in turn reduce overall demand, including oil.
Adding to the concerns, a recent string of economic data from China, the world’s second biggest oil consumer, highlighted the rapid loss of economic momentum since the second quarter.
China’s sputtering economy has gnawed at global financial markets in recent months, with the property crisis spooking investors amid fears of contagion.
However, tightening oil supply due to production cuts by the Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, and increasing demand, mainly due to higher travel and increased industrial activity in the US, have supported prices, and could lead to an increase in the coming days, analysts said.
US oil production offset some of the production cut due to OPEC+ cuts, but the falling number of US rigs means such support is likely to be short-lived, ANZ Research said in a report on Friday.
Data released this week also showed that US crude oil inventories fell by nearly 6 million barrels last week due to strong exports and increased refining rates. Weekly product supply, a proxy for demand, rose to its highest level since December.
Despite the recent economic weakness, China drew rare crude inventories in July, the first time in 33 months its inventories fell. “Momentum indicators point to limited supply. Investors are starting to increase their bullish
bets , positionsnet-long hit yearly highs,” ANZ said in its report.
Source : Antara News
