Home Business Oil firm on U.S. crude stocks and China optimism, OPEC+ talks limit gains

Oil firm on U.S. crude stocks and China optimism, OPEC+ talks limit gains

9 min read
Comments Off on Oil firm on U.S. crude stocks and China optimism, OPEC+ talks limit gains
0
31


Article content

SINGAPORE, Nov 30 (Reuters) –

Oil prices firmed in Asian trade on Wednesday on falling U.S. crude inventory figures from API, a lower greenback and some optimism on the outlook for China’s demand and economy.

Article content

A high likelihood that OPEC+ would leave output unchanged at its upcoming meeting limited gains.

Brent crude futures had firmed 70 cents or 0.84% to $83.73 per barrel by 0732 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 56 cents or 0.72% to $78.76 per barrel.

Advertisement 2

Article content

The market is still in a contango structure, with forward month futures trading higher than the prompt month futures.

Helping to boost prices, U.S. crude oil stocks were expected to have dropped by about 7.9 million barrels in the week ended Nov. 25, according to market sources citing American Petroleum Institute figures on Tuesday.

Official figures are due from the U.S Energy Information Administration on Wednesday.

Optimistic sentiment in relation to China contributed to the uptrend in the Asian afternoon trade.

“China’s weak PMI data may have been digested already as the recent reopening optimism overshadows the lagging economic data,” said CMC market analyst Tina Teng, referring to the purchasing managers’ index for November, issued earlier on Wednesday.

Advertisement 3

Article content

China also reported fewer COVID-19 infections than on Tuesday, amid market speculation of weekend protests possibly prompting loosening in COVID-19 movement restrictions. Guangzhou, a southern city, relaxed COVID prevention rules in several districts on Wednesday.

With current lockdowns, real-time data indicates only a small downturn in traffic, with national traffic in the fourth week of November at 95% of 2019 levels, compared with 97% earlier in the month, according to Rystad Energy senior vice president Claudio Galimberti. That signaled better-than-expected fuel demand domestically.

Galimberti estimated that Brent would trade higher around $90 a barrel and WTI around $83 a barrel in the first half of December.

Advertisement 4

Article content

Asian shares also rebounded on Wednesday as investors pinned hopes on China eventually reopening its economy.

Slight support also came from a weaker U.S. dollar. Fed Chair Jerome Powell is scheduled to speak about the economy and labor market at a Brookings Institution event on Wednesday, when investors will be looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.

“Energy markets are not properly pricing how resilient the global economy remains and this week we could see an upward revision with the U.S. Q3 GDP reading,” senior analyst Edward Moya at OANDA said in a client note.

Thin liquidity and an overall lack of trading volumes towards the year-end could also be propping up the market, according to Virendra Chauhan at Energy Aspects.

On the supply side, the OPEC+ decision to hold its Dec. 4

meeting virtually

signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters on Wednesday.

“Oil’s rally ran out of steam after reports that OPEC+ might end up keeping their output steady. Expectations were growing for them to seriously consider an output cut,” Moya added. (Reporting by Laila Kearney in New York and Trixie Yap in Singapore; Editing by Bradley Perrett and Lincoln Feast)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

Italy’s Meloni in Libya to conclude $8 billion gas deal

Breadcrumb Trail Links PMN Business Article content TRIPOLI — Italian Prime Minister Giorg…