Brent edges higher on Chinese oil demand, gains capped by weak economic data

The front-month ICE Brent contract has gained $0.51/bbl on the day from Friday, to $76.18/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Optimism over recovering Chinese oil demand boosted market sentiments last week, and has helped Brent futures up over the weekend, too. China’s refinery throughput rose by 15% on the year in May and noted its second highest level ever, official data from the world’s largest oil importer has shown.

In the US, the dollar has fallen to a five-week low, as compared to a basket of other currencies, after the US Federal Reserve (Fed) last week said that it is keeping its key interest rate unchanged for this month, reports Reuters. A decline in the US dollar value makes Brent cheaper and more attractive to those holding other currencies.

Downward pressure:

Uncertainty over China’s economic growth has put some downward pressure on Brent. Several major banks including JP Morgan, UBS and Bank of America have lowered their 2023 gross domestic product (GDP) growth forecasts for China after the country’s official trade data for May showed a minimal post-Covid recovery.

"China's economic uncertainties may have caused the selloff after a two-day rebound in oil markets ahead of The People's Bank of China's (PBOC) decision on its loan prime rates (LPR) this week," said Tina Teng, an analyst at CMC Markets.

By Aparupa Mazumder 

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