As traders evaluate China’s inflation statistics and get ready for this week’s important U.S. readings, oil prices continue to trend higher after declining earlier in the afternoon.
Following a week-end decline, Brent oil saw a 0.3% increase to US$83.02 per barrel, while West Texas Intermediate saw a 0.3% rise to US$78.49 per barrel at the last check early on Monday.
In April, China’s consumer price index increased for a third consecutive month, indicating a resurgence of domestic demand in the country that consumes the most oil. For more clues about the outlook for interest rates, investors watch for the U.S. Producer Price Index reading for April, which is coming on Tuesday, and the highly followed Consumer Price Index data on Wednesday.
In the meanwhile, the IEA and OPEC will announce its monthly oil market reports this week, offering a snapshot of global demand and supply expectations for this year and next. Last week, report showed that US gasoline and distillate inventories rose ahead of the start of the US driving season, offsetting a drop in crude oil inventories, the bank noted.
Meanwhile, tensions in the Middle East remained elevated and the market still expects further constraints on output from the Organization of the Petroleum Exporting Countries, which is scheduled to meet in June to discuss their supply policy, ANZ Bank said.
Oil market faces uncertainties from Geopolitical tensions which escalated with sustained Israeli attacks on the Palestinian side of the Rafah border crossing. Yemen’s Houthi group threatened on Tuesday to expand its attacks on shipping routes in the Red Sea if the Israeli military invades the city of Rafah in the southern Gaza Strip.
Cease-fire talks were held in Cairo in the presence of delegations from Qatar, the US and the Palestinian group Hamas. According to Israeli media, the Israeli team departed Cairo on Thursday night. Media reports, citing anonymous, informed sources, stated, without elaborating, that there are ‘unsolvable disagreements’ between the two sides.
Oil prices rose over dwindling hopes of reaching a cease-fire as fears were raised about the conflict expanding in the region. Data showing elevated demand appetite in the US and China, the world’s biggest oil consumers, also aided price increases during the week.
US commercial crude oil inventories decreased by 1.4 million barrels during the week ending May 3, in line with market expectations of a 1.43 million-barrel decline, according to data released by the Energy Information Administration (EIA) late on Wednesday.
Crude oil imports in China, the world’s largest oil importer, reached 10.88 million barrels per day last month, increasing by 5.45% year-on-year.
Oil demand in the country is also expected to increase by 680,000 bpd this year, according to the Organization of the Petroleum Exporting Countries (OPEC) latest report. Imports in China increased by 8.4%, above expectations, which experts interpret as a positive sign that expenditures in the country are on the rise.
