Oil prices rise as US inventories fall and Chinese imports rise: Finance: Business Times

Oil markets staged a notable rebound on Thursday, supported by key developments in the United States and China, the world’s two largest consumers of crude oil. Prices rose as US crude inventories fell more than expected and Chinese imports rose, signaling a potential rise in global oil demand.

Brent crude futures for July rose 55 cents to $84.13 a barrel, while U.S. West Texas Intermediate crude for June rose 62 cents to $79.61 a barrel. This recovery comes after a period of relative weakness in the oil market, due to broader economic signals and geopolitical influences.

U.S. crude inventories fell by 1.4 million barrels last week, exceeding analysts’ expectations of a decline of 1.1 million barrels, according to the latest data from the Energy Information Administration. This decline in inventories is partly attributed to an increase in refinery activity, which increased by 307,000 barrels per day.

At the same time, China, the world’s largest oil importer, reported a 5.45% increase in crude oil imports in April compared to the previous year, with customs data showing imports of 44.72 million tonnes, or about 10, 88 million barrels per day. This increase in Chinese demand offers a positive outlook for oil markets and could potentially offset some of the recent weakness in prices.

Market sentiment was also affected by geopolitical tensions in the Middle East, especially around the Israel-Hamas conflict, where hopes for a ceasefire fluctuated. These tensions have historically had a palpable impact on oil prices due to the region’s important role in global oil production.

The complex dynamics of the oil market were further highlighted by comments from market analysts. “While there may be some relief for oil prices in the short term, it may be difficult to return to April’s highs above $90 a barrel, where geopolitical tensions were at their peak,” said Yeap Jun Rong, a strategist at IG.

Adding an extra layer to the market’s outlook, the Organization of the Petroleum Exporting Countries (OPEC+) is set to meet on June 1, with expectations leaning towards an extension of current production cuts. However, discussions about possible increases in production targets are also on the table, given the growing spare capacity in key Member States.

In the US, the Biden administration has adjusted its strategy regarding the Strategic Petroleum Reserve (SPR) and set a price ceiling of $79.99 per barrel for replenishing reserves. This policy is aimed at stabilizing domestic oil supplies and prices, especially as US crude remains below the $80 threshold.

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