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Oil Bounces as China, US Data Ease Recession Concerns

Oil Bounces as China, US Data Ease Recession Concerns

Monday, 8 August, 2022 - 07:00
An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, US June 9, 2016. REUTERS/Richard Carson/File Photo

Oil prices bounced higher from multi-month lows on Monday as investors' appetite improved following data on US jobs and Chinese exports data that eased recession concerns.


Brent crude futures had risen 81 cents, or 0.9%, to $95.73 a barrel by 0638 GMT. US West Texas Intermediate crude was at $89.76 a barrel, up 75 cents, or 0.8%.


Both contracts settled higher on Friday after jobs growth in the United States, the world's top oil consumer, unexpectedly accelerated in July. On Sunday, China also surprised markets with faster-than-expected growth in exports.


Signs of weak demand in US inventories last week had encouraged trades based on a weakening outlook, said Stephen Innes, managing director of SPI Asset Management. But the jobs and exports data had somewhat reversed that view, he added.


Front-month Brent prices last week hit the lowest levels since February, tumbling 13.7% and posting their largest weekly drop since April 2020, while WTI lost 9.7%, as concerns about a recession hitting oil demand weighed on prices.


China, the world's top crude importer, imported 8.79 million barrels per day (bpd) of crude in July, up from a four-year low in June, but still 9.5% less than a year earlier, customs data showed.


Chinese refiners drew down stocks amid high crude prices and weak domestic margins even as the country's overall exports gained momentum, Reuters reported.


Reflecting lower US gasoline demand, and as China's zero-COVID strategy pushes recovery further out, ANZ lowered its oil demand forecasts for 2022 and 2023 by 300,000 bpd and 500,000 bpd, respectively.


Oil demand for 2022 is now estimated to rise by 1.8 million bpd year-on-year and settle at 99.7 million bpd, just short of pre-pandemic highs, the bank said.


Russian crude and oil products exports continued to flow despite an impending embargo from the European Union that will take effect on Dec. 5.


In the United States, energy firms last week cut the number of oil rigs by the most since September. It was the first drop in 10 weeks.


The US clean energy sector received a boost after the Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, among other issues.


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