Brent flat amid weak Chinese data and potential US crude oil shortage

The front-month ICE Brent contract has shed $0.05/bbl on the day, to $78.56/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures gained some upward momentum amid concerns about a potential crude supply shortage in the US.

Baker Hughes on Monday reported a decline in active oil rigs in the US last week. The energy company in its latest report said that the number of active oil rigs in the US fell by three units to 537 last week, which is the lowest since April last year.

The oil market is now waiting for more cues from the Energy Information Administration's (EIA) weekly US crude stocks data.

On the demand side, market analysts said that oil demand in China was strong in June.

“Drilling deeper into the numbers suggests oil demand in China over June was fairly strong with implied demand growing almost 14% year-on-year,” said ING's head of commodities research Warren Patterson.

Downward pressure:

Brent pulled back from last week’s highs and dropped below the $80/bbl mark after China reported weaker-than-expected gross domestic product (GDP) figures.

Additionally, multiple sources have confirmed that Libya has resumed oil production from El-Sharara and El-Feel oilfields. Production from these oilfields was stopped last week following protests that erupted after a former government official was abducted.

“Crude prices are lower as China’s economic recovery stalled and as Libya resumed production at key oil fields,” said OANDA’s market analyst Ed Moya.

“Oil won’t catch a bid unless China finally unleashes meaningful stimulus that propels large parts of the economy,” he added in a note.

By Aparupa Mazumder

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