Oil rallies after encouraging data
Posted on 01/24/19 6:22 PM
Oil prices have rallied sharply, with the US benchmark hitting a three-month high, after positive Chinese, Japanese and US economic data raised expectations for more energy demand.
West Texas Intermediate for July delivery leaped $1.75 to close Monday at $104.41 a barrel, the highest close for the benchmark US futures contract since March 3.
The European benchmark, Brent North Sea crude for delivery in July, settled at $109.99 a barrel, a gain of $1.38 from Friday’s close, in London.
The market gained support from China, the world’s second-largest consumer of crude oil, after official data showed on Sunday its trade surplus surged 75 per cent in May from a year ago.
Chinese exports increased 7.0 per cent and imports declined 1.6 per cent, resulting in a trade surplus of $US35.92 billion ($A38.86 billion).
“The weekend (Chinese) report comes as a quite unexpected surprise on the upside, underpinning the demand for commodities,” said Desmond Chua, an analyst for traders CMC Markets.
“The strong (export) gains overshadowed an unexpected fall in imports that could signal weaker domestic demand,” said Phil Flynn of Price Futures Group.
Flynn noted the Chinese data followed the US jobs report on Friday showing employment returning to its pre-recession peak, “confirming steady improvement in the world’s top economy” and top crude consumer.
Japan meanwhile revised upward its economic growth for the first quarter to the fastest pace in more than two years, at an annual rate of 6.7 per cent.
Investors also were focused on Wednesday’s meeting of the OPEC oil cartel in Vienna.
The Organization for Petroleum Exporting Countries, whose dozen member nations together supply about one third of the world’s crude, is forecast by analysts to maintain its daily output ceiling at 30 million barrels of oil.