Oil rose as data showed China’s economic recovery from the coronavirus crisis is gathering strength, offsetting a bleak assessment of demand by another top energy organization.
Futures gained 1.7 per cent in below-average trading volumes in New York. Chinese retail sales rose for the first time this year in August while industrial production gained by a larger-than-expected 5.6 per cent. The data drove European equities higher.
The International Energy Agency was the latest bearish voice on oil demand, following pessimistic calls this week from BP plc, Trafigura Group and the OPEC cartel. The market outlook has grown “even more fragile” with a resurgence of the pandemic, the IEA said Tuesday.
Prices – down about 11 per cent this month after rising in the previous four –– also face some headwinds from the latest expectations for U.S. crude stockpiles. Inventories in the world’s biggest consumer rose by about 2.3 million barrels last week, according to a Bloomberg survey before official government data on Wednesday. Industry figures are due later Tuesday.
“The market has now priced in the bleak demand recovery projections and the supply comeback,” said Bjornar Tonhaugen, an analyst at consultant Rystad Energy A/S in Oslo. “ We are now at a stage where until things get better at the demand front, prices may swing around the same mark for a while.”
- West Texas Intermediate for October delivery rose 64 cents to $37.90 a barrel as of 11:25 a.m. London time, after falling seven cents on Monday
- Brent for November gained 62 cents, or 1.6 per cent, to $40.23. It lost 0.6 per cent in the previous session
U.S. gasoline stockpiles probably fell by 600,000 barrels last week, according to the survey, which would be a sixth weekly decrease if confirmed by Energy Information Administration data. Distillate inventories, which include diesel, are also expected to decline.
© 2020 Bloomberg L.P.