Chinese recovery and US demand | Oil up slightly

(New York) Oil prices ended up slightly on Wednesday, driven by good Chinese indicators that support the thesis of an economic recovery, as well as a rebound in US demand for refined products.


The price of a barrel of Brent from the North Sea for delivery in May, which was the first day of use as a benchmark contract, climbed 1.03%, to close at 84.31 dollars.

The barrel of American West Texas Intermediate (WTI), with maturity in April, gained 0.83%, to 77.69 dollars.

The Purchasing Managers’ Activity Index (PMI) for the manufacturing sector published by the National Bureau of Statistics (NBS) in China stood at 52.6 points in February, against 50.1 in January, the highest since 2012.

The PMI index of non-manufacturing sectors also jumped, to 56.3 points against 54.4 a month earlier.

“The restart of the Chinese economy is taking shape, with relatively little government support (measures) so far,” commented Duncan Wrigley of Pantheon Macroeconomics in a note.

These new signs of an acceleration in China, the world’s largest oil importer, have supported the price of black gold.

Another element of support, the less than expected increase in commercial oil inventories in the United States. They rose by 1.2 million barrels last week, against 1.9 million expected.

This phenomenon is notably attributable to the jump in crude oil exports, which last week shattered the absolute record, at 5.62 million barrels per day.

In addition, the report also revealed a small jump in demand, noted by analysts who have been pointing out, for several weeks, the weak American appetite for crude and refined products.

Gasoline in particular crossed the threshold of 9 million barrels per day (9.11) for the first time in two months. As for kerosene, demand rose by 14% over one week.

“There has been a little music conducive to the rise in prices” for several days, “with the rebound of China, the resumption of demand for kerosene and concerns about Russian supplies”, disrupted by international sanctions, summarizes Eli Rubin of EBW Analytics Group.

“The problem is that this does not really translate into the weekly American inventory figures, which remain on ten consecutive weeks of increases, argues the analyst, to justify the impossibility of prices to break out of the range tightened in which they evolve for nearly three months.

Commercial reserves have thus grown by 62 million barrels since mid-December.

In addition, the arrival on the market between April and June of 26 million barrels drawn from American strategic reserves (SPR) is looming, under a law passed by Congress in 2015.

The lack of momentum in prices should therefore continue until the summer, according to the analyst.


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