Oil Updates — prices dip on weak China data, but hopes for US-China trade deal support

Arab News

2 days ago

SINGAPORE: Oil prices slipped on Monday on weak China data, but held on to most of last week's gains, as investors awaited US-China trade talks in London later in the day, hoping a deal could boost the global economic outlook and fuel demand.
Brent crude futures slipped 18 cents, or 0.27 percent, to $66.29 a barrel by 08:44 a.m. Saudi time. US West Texas Intermediate crude fell 15 cents, or 0.23 percent, to $64.43.
China's exports growth slowed to a three-month low in May as US tariffs slammed shipments, data showed, while factory-gate deflation deepened to its worst in two years, heaping pressure on the world's second-largest economy both at home and abroad.
The data also showed that China's crude oil imports declined in May to the lowest daily rate in four months, as state-owned and independent refiners underwent widespread planned maintenance.
'Bad timing for crude oil, which was testing the top of the range and knocking on the door of a technical break above $65,' said IG market analyst Tony Sycamore, referring to WTI prices.
'That said I would expect the reaction to be less extreme than usual, given US and China trade talks later today.'
Brent had advanced 4 percent, and WTI gained 6.2 percent, last week for their first weekly gain in three, as the prospect of a US-China trade deal boosted some investors' risk appetite.
A US jobs report showing unemployment held steady in May appeared to increase the odds of a Federal Reserve interest rate cut, further supporting gains last week.
The prospect of a China-US trade deal that could support economic growth and increase demand for oil outweighed worries about increased OPEC+ supply after the group announced on May 31 another big output hike for July.
HSBC expects OPEC+ to accelerate supply hikes in August and September, which are likely to raise downside risks to the bank's $65-per-barrel Brent forecast from the fourth quarter of 2025, it said in a research note on Friday.
Capital Economics researchers said they believe the 'new faster pace of (OPEC+) production rises is here to stay.'
WTI's discount to Brent has also been narrowing on a combination of increased OPEC+ output, modest US crude oil supply growth and the potential for output declines next year, ING analysts led by Warren Patterson said in a note.
The US benchmark strengthened on supply concerns after wildfires disrupted production in Canada and robust US fuel demand during the summer driving season.
The number of operating US oil rigs, an early indicator of future output, fell by nine to 442 last week, energy services firm Baker Hughes said on Friday.