Oil gets a boost from latest economic data

Brent’s price moved higher in the past session as manufacturing activity in the two top oil consumers of the world – the US and China – expanded in June.

IMAGE: Flags of the US and China. Getty Images

The Manufacturing Purchasing Managers' Index (PMI) reading in the US, the world's largest oil consumer, came in at 49% in June, up from May’s 48.5%, the Institute for Supply Management (ISM) reported.

In China, manufacturing PMI came in at 49.7% in June, slightly higher than the previous month's 49.5% growth, market intelligence provider JLC reported citing the country’s National Bureau of Statistics (NBS).

The data points to a small growth in the manufacturing sectors of both countries, market analysts said, adding that it has boosted some demand growth expectations for key commodities like oil.

China’s manufacturing PMI was “well above market expectations,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

The development comes as Beijing and Washington restart negotiations, which could potentially ease trade tensions between the world’s largest oil consumers. The data shows that the world’s second-largest oil consumer “is benefiting from the truce in the US-China trade war,” Hynes added.

A PMI reading above 50 typically indicates good economic health and an expansion in the manufacturing sector, which includes production, inventory levels, new orders, etc. It also boosts demand growth, ultimately supporting prices of commodities like oil.

By Aparupa Mazumder

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