Oil moved higher in New York as traders awaited developments in the debt ceiling standoff in Washington, while assessing the latest data on Chinese demand and US stockpiles.
(Bloomberg) — Oil moved higher in New York as traders awaited developments in the debt ceiling standoff in Washington, while assessing the latest data on Chinese demand and US stockpiles.
West Texas Intermediate futures erased earlier losses and rose markedly above the previous session’s close, while Brent also gained. The International Energy Agency said on Tuesday that global demand will climb more strongly than previously estimated this year as China’s post-pandemic recovery surpasses expectations. Still, some banks cut growth forecasts for the Asian nation after weak economic data for April.
Equity markets pointed to a recovery from a selloff on Wall Street as traders pinned hopes that talks will break a deadlock on raising the US debt ceiling and avert a potentially catastrophic default.
The industry-funded American Petroleum Institute reported nationwide crude inventories rose by 3.69 million barrels last week with a build-up at the key hub in Cushing, Oklahoma. Still, gasoline and distillate inventories fell. Government data were due later Wednesday.
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“Concerns over the health of the global economy and oil demand prospects have been front and center of the oil markets of late,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “We’ve long argued that the bearish price action is unjustified.”
Crude is down about 11% this year as China’s slower-than-expected recovery, a campaign of aggressive monetary tightening from the Federal Reserve, and more recent concerns over the US debt ceiling weigh on the outlook. Still, US retail sales rose in April, suggesting that consumer spending in the world’s biggest economy is holding up in the face of economic headwinds.
UBS Group AG trimmed its bullish oil price forecast, lowering its year-end outlook for Brent to below $100 a barrel. The bank still expects a rebound in prices however, forecasting a 1.5 million barrel-a-day market deficit in June.
–With assistance from Archie Hunter.
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