2023-06-16 07:38:00
Russian oil refinery (expressive – Archyde.com)
Oil prices
Optimism about Chinese demand for crude
Oil prices are heading for a weekly rise today, Friday, after incurring losses for two consecutive weeks, amid optimism about rising energy demand in China, the largest importer of crude, and the weakness of the dollar.
By 06:32 GMT, Brent crude futures rose 20 cents, or 0.3%, to $75.87 a barrel, while US West Texas Intermediate crude futures rose 16 cents, or 0.2%, to $70.78 a barrel. The two benchmarks rose about 3% during the previous session.
Yesterday’s data, Thursday, showed that the production of oil refineries in China rose 15.4% in May from a year ago, recording the second highest total level ever. The CEO of Kuwait Petroleum Corporation said that Chinese demand for oil is expected to continue to rise during the second half of the year.
In the United States, data on Thursday showed that retail sales rose unexpectedly in May, and jobless claims increased more than expected last week. The dollar index fell to a five-week low against a basket of currencies.
A weaker dollar makes oil cheaper for holders of other currencies, which could boost demand.
Analysts also expect prices to receive support from the voluntary crude production cuts of the Organization of the Petroleum Exporting Countries (OPEC) and its allies since May and the Saudi cuts in July.
However, market sentiment is clouded by a weak economic outlook, as China’s industrial output and retail sales growth missed expectations in May.
“Crude prices are looking for support as the global growth outlook continues to look vulnerable to further shocks from rate hikes,” OANDA analyst Edward Moya said in a note.
The European Central Bank raised interest rates on Thursday to the highest level in 22 years, as expected. The Federal Reserve this week signaled another increase of at least half a percentage point by the end of the year.
Higher interest rates ultimately increase borrowing costs, which can slow economic growth and reduce demand for oil.
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