Oil prices declined on Thursday despite upbeat Chinese trade data, which revealed significant growth in imports and exports. However, concerns over delayed U.S. interest rate cuts outweighed China’s positive indicators.
By 6:28 GMT, Brent crude futures saw a 0.05 percent decline to $82.92. Meanwhile, West Texas Intermediate crude futures declined by 0.04 percent, to $79.10 a barrel.
China’s growing demand
China, the world’s leading crude importer, recorded a 5.1 percent increase in imports during the first two months of 2024 compared to the same period last year. This surge, amounting to approximately 10.74 million barrels per day, underscores robust demand for crude as refiners sought to meet fuel sales demand during the Lunar New Year holiday. This supported oil prices in early trading. Additionally, China’s reduced exports of refined products by 30.6 percent year-on-year to 8.82 million tons in January and February further tightened global supply.
The positive trade data from China signals a potential turnaround in global trade dynamics, offering a glimmer of hope for oil prices and policymakers grappling with economic uncertainties. As the world’s second-largest economy, China’s encouraging trade figures bode well for the broader economic recovery.
U.S. inventory data
While oil prices received a boost from Chinese trade data in earlier trading, mixed signals emerged from U.S. inventory figures. Crude inventories continued to rise for the sixth consecutive week, albeit at a slower pace than expected. Crude inventories rose by 1.4 million barrels which is around two-thirds of the expected 2.1 million-barrel rise. Meanwhile, gasoline and distillate stocks fell more than anticipated, suggesting possible shifts in demand patterns, the Energy Information Administration data showed.
Moreover, the prospect of delayed U.S. interest rate cuts weighed on market sentiment, tempering the impact of positive market indicators and pushing oil prices downwards. Despite Federal Reserve Chair Jerome Powell’s remarks on the possibility of reducing benchmark interest rates this year, uncertainties surrounding inflation persist.
Read: How to buy and invest in crude oil
Market outlook
As market participants assess the evolving economic landscape, attention remains focused on the trajectory of U.S. interest rates and their potential implications for oil prices. Continued vigilance is warranted as investors navigate through a landscape shaped by both domestic and international economic developments.
For more markets news, click here.
