© Reuters.

Investing.com — Oil prices rose Thursday, boosted by a large drop in inventories and further signs of supply tightness, outweighing a slowdown in China’s manufacturing activity.

By 09:20 ET (13.20 GMT), the U.S. crude futures traded 1.5% higher at $82.83 a barrel, while the contract climbed 1.1% to $86.19. 

Data released Thursday showed that pace of annual inflation accelerated in the U.S. last month, while jobless claims declined, bolstering predictions that the Federal Reserve may keep interest rates on hold at its next policy meeting in September.

Large U.S. inventories draw

This has helped the crude market retain the positive tone the followed the substantial draw in U.S. crude inventories, data showed on Wednesday. 

The Energy Information Administration reported that U.S. oil stockpiles shrank by a 10.6 million barrels last week, as refiners ramped up production before the Labor Day weekend, which usually signals peak U.S. summer demand. 

The large draw leaves total crude oil inventories at just under 423 million barrels – the lowest level since December 2022.

Global supply remains tight

Helping the market has also been indications that the global supply situation will remain tight as the year progresses.

Traders are looking to see if Saudi Arabia extends its voluntary oil production cut of 1 million barrels per day  into October, adding to cuts put in place by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a combination known as OPEC+.

“Our expectation is that Saudi Arabia will extend this cut through into October,” said analysts at ING, in a note. “There are clearly still some broader demand concerns and returning this supply to the market could see Brent back below US$80/bbl – something the Saudis would prefer not to see.”

At the same time, there are growing supply risks after a military coup in OPEC member Gabon, which produces around 200 million barrels a day. 

While this is not a large amount, any disruption in what is already a tight market is likely to have an impact on the wider market.  

Traders will also be looking for any potential impact on supply from the Gulf of Mexico after Idalia made landfall in Florida, losing its hurricane status and returning to a tropical storm.

Chinese economic weakness weighs

Still, gains have been curtailed by more signs of economic weakness in China, the world’s largest crude importer.

Data released earlier Thursday showed that China’s manufacturing sector shrank for a fifth straight month in August, while its non-manufacturing sector grew slightly less than expected, with weakness in the real estate sector acting as a major headwind.

China’s faltering post-pandemic economic recovery has weighed on the crude markets this year, as traders had been looking for growth in the second largest economy in the world to boost crude demand this year.

(Ambar Warrick contributed to this item.)



Source link

(This article is generated through the syndicated feed sources, Financetin doesn’t own any part of this article)

Leave a Reply

Your email address will not be published. Required fields are marked *