Oil up, gains fuelled by US and Chinese economic data
LONDON, May 7, 2021 – Oil was up Friday morning in Asia, set for its second consecutive weekly advance thanks to a broad rally in commodities as well as positive economic data from the US and China brightening the fuel demand outlook.
Brent oil futures were up 0.73% to $68.59 by 13:45 PM ET (5:45 AM GMT) and WTI Futures gained 0.74% to $65.19.
In the US, Thursday’s initial jobless claims data said that 498,000 claims were submitted during the past week, the lowest since mid-March 2020 when Covid-19 was declared a pandemic. Investors now await April’s employment report, including non-farm payrolls, due later in the day.
More positive data came from China, the world’s biggest oil importer, earlier in the day. The Caixin Services Purchasing Managers Index (PMI) for April was 56.3, exports grew 32.3% year-on-year, imports grew 43.1% year-on-year and the trade balance stood at $42.86 billion. The better-than-expected data reflected strong domestic and international demand, with Chinese energy consumption also rebounding from 2020’s Covid-19-induced slump and crude imports jumping by more than 7% in the first four months of 2021.
The black liquid has roared back to life in 2021, with Brent futures coming close to passing the $70 mark on Wednesday. The positive American and Chinese data offset concerns about rising numbers of Covid-19 cases in other countries. The number of daily cases in India, the third-largest oil importer, hit a fresh record of 414,188.
“Brent at $68 to $69 appears to be broadly in equilibrium, having factored in the US-Europe reopening optimism and the Covid-19 hotspots across Asia and Latin America… the worst of India news has been baked in. I don’t see it delivering bigger shocks to oil,” Vanda (NASDAQ:VNDA) Insights founder Vandana Hari told Bloomberg.
Investors are also monitoring US-Iran efforts to revive a nuclear agreement that could lead to the lifting of sanctions on Iranian crude supplies. A fourth round of indirect talks in Vienna beginning later in the day, a pact could come within the month if Iran agrees to rein in its atomic work.
However, “I don’t think Iran is a factor in the short-term outlook… beyond the window dressing, it looks like an impasse,” said Vanda Insights Hari.
First published on Investing.com