Oil rebounded, recouping all of Wednesday’s losses, as strengthening demand in China outweighed concerns over further interest rate hikes in the US.
(Bloomberg) — Oil rebounded, recouping all of Wednesday’s losses, as strengthening demand in China outweighed concerns over further interest rate hikes in the US.
West Texas Intermediate futures traded near $70 a barrel on Thursday after falling 1.7% in the previous session. China this week issued larger crude-import quotas than a year earlier, and while the gains weren’t as big as some market participants had hoped for, they were enough to offset the bearish sentiment stemming from the Fed’s warning of higher-than-expected borrowing costs.
“Although growth is still slower than most traders had anticipated, it is still growing,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities.
Still, renewed recession worries are showing up in futures’ time spreads. Brent’s prompt spread flipped into contango, and WTI’s contango widened to its most bearish since February. Swelling crude inventories at the storage hub in Cushing, Oklahoma, which have reached the highest since June 2021, are adding to the bearish sentiment.
Crude in New York has lost 13% this year and drifted sideways in a narrow range since early May as concerns over a potential US slowdown and a lackluster rebound in China’s economy wrestle with Saudi-led supply cuts. China’s apparent oil demand last month rose 17% from a year ago, while industrial output also edged higher, according to official data released on Thursday.
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