Oil Prices Rise as US Economic Growth Beats Estimate
Oil prices rose on Friday as US economic grew faster than anticipated in the second quarter of 2024, according to data from Commerce department.
Oil prices increased on Friday over signals of greater oil demand supported by data showing that the US economy had grown faster than expected.
ICE Brent rose 0.15% to $82.49 per barrel. Also, the American benchmark West Texas Intermediate (WTI) traded at $78.39 per barrel at the same time, a 0.14% rise from the previous session that closed at $78.28 per barrel.
The US economy expanded 2.8% in the second quarter of 2024, according to the Commerce Department’s first advance reading released Thursday. The figure came much higher than market estimates of 2%.
The American economy expanded by 1.4% in the first quarter of 2024. The current dollar GDP increased 5.2% at an annual rate, or $360 billion, in the second quarter to reach $28.63 trillion, the Commerce Department said in a statement. In the first quarter, GDP rose 4.5%, or $312.2 billion, it added.
The data also sparked increased optimism over a potential interest rate cut by the US Federal Reserve in September. However, gains were weak as prices continued to be depressed by slower-than-expected economic growth data in China.
China’s gross domestic product (GDP) rose by 4.7% in the second quarter of 2024, below market expectations, according to official data.
The data prompted concerns about oil demand in the world’s largest crude oil importer. Demand worries were also supported by figures showing a softness in oil imports.
Uncertainty over the country’s oil demand fuels market players’ fears that imports and refining activity could also remain low.
Crude oil prices are trading almost flat early in the morning as recent official estimates suggest weaker oil demand in China for the latter half of the year, according to ING commodity strategists Ewa Manthey and Warren Patterson note.
Analysts highlighted a mixed market expectations over whether OPEC+ will proceed with plans to boost supplies next quarter are helping prices to limit losses.
Recent estimates from China Petrochem show that overall oil consumption in China might fall 3.8% year-on-year to 184mt in the second half of the year.
The nation’s gasoline and diesel demand could fall by 3.2% year on year and 6.4% year on year respectively over this period, which could weigh on its crude oil imports, ING said.
Data from Mysteel OilChem shows that Chinese state and independent oil refiners cut run rates to 76.5% of capacity for the week ending 25 July, the highest in almost two months.
Meanwhile, the independent refiners in Shandong reduced run rates to 49% of capacity in the week ending on 26 July, the weakest in two weeks.
In Singapore, oil product stocks increased by 854,000 barrels over the last week for a second consecutive week to 46.6 million barrels, the highest since 8 May 2024.
This increase was driven predominantly by light distillates, with these stocks increasing by 1.2 million barrels over the reporting week, ING note stated. Total oil product stocks in Singapore are higher than the five-year average of 44.6m barrels.
The latest data from Insights Global shows that refined product inventories in the ARA region fell by 48k tonnes over the last week, to 5.87 million tonnes. The decline was driven by gasoil inventories with stocks falling by 73kt to 2mt over the reporting week.
Meanwhile, EIA storage data yesterday showed that natural gas inventories increased by 22bcf/d over the past week, higher than the 11bcd/f expected but below the five-year average of 31bcf/d. Total US storage totalled 3.23tcf as of 19 July, 16.4% more than the five-year average. #Oil Prices Rise as US Economic Growth Beats Estimate
