Oil prices increase as markets are shocked by China’s manufacturing data.
With U.S. inventories still rising and Europe still having trouble controlling inflation, there are still many variables that are adverse for oil.
The Fed’s indication that it would cease rising interest rates later this year contributed to the positive mood in the oil markets.
Today’s increase in the price of crude oil was fueled by fresh data from China, which showed that factory activity there was rebounding after a downturn brought on by lockdowns last year.
At the time of writing, West Texas Intermediate was changing hands at over $77.60 a barrel and Brent oil was trading just over $84 per barrel, both up roughly 0.7 percent from yesterday’s closing.
For the first time in seven months, according to Reuters, manufacturing activity in China increased last month. Also, according to PMI statistics, manufacturing activity increased at its quickest pace in more than ten years, supporting predictions of a robust economic recovery in the world’s top oil importer.
The main cause of projections for higher oil prices later in the year is thought to be China’s increased oil consumption. Most analysts, according to a recent Reuters survey, predict Brent oil to surpass $90 per barrel in the second half of the year. Russian supply and Chinese demand were mentioned as influences by the respondents.
The American Petroleum Institute’s prediction that crude oil stocks in the United States had increased for yet another week was contradicted this week by forecasts for strong Chinese demand. The build, according to the API, was 6.2 million barrels.
The Energy Information Agency will provide official statistics on U.S. stocks later today, but during the last several weeks, the EIA has also reported sizable inventory growth.
Recent U.S. inventory reports have somewhat restrained oil price increases; OPEC output statistics might further restrict price increases. In February, the group’s combined production increased by 150,000 bpd from the prior month to a total of 28.97 million barrels per day, according to a Reuters poll.
While this is still 700,000 bpd less than what OPEC produced in September of last year, if the rise is verified, it would indicate that OPEC is not as strict about enforcing its production cap as has been shown.