Oil rises on robust China export data, but new lockdowns cap gains

Oil prices held firm near 13-week highs on Thursday after China reported stronger-than-expected exports in May, although new Shanghai lockdown restrictions capped gains.

Brent crude futures for August rose 35 cents, or 0.3%, to $123.93 a barrel at 0404 GMT, whereas U.S. West Texas Intermediate crude for July was at $122.35 a barrel, up 24 cents, or 0.2%.

Each benchmarks closed Wednesday at their highest since March 8, matching ranges seen in 2008.

China’s exports jumped 16.9% from a yr earlier as easing COVID curbs allowed some factories to restart, the quickest development since January this yr, and greater than double analysts’ expectations for a 8.0% rise. Exports have been up 3.9% in April.

Nonetheless, components of Shanghai started imposing new lockdown restrictions on Thursday, with residents of sprawling Minhang district ordered to remain residence for 2 days in a bid to regulate COVID-19 transmission dangers.

“The export efficiency is spectacular within the context of the nation’s multi-city lockdowns within the month,” Stephen Innes, managing accomplice at SPI Asset Administration, stated in a word Thursday.

“Nonetheless, the obvious adverse suggestions loop is there’s much less incentive for the authorities to maneuver away from ‘zero COVID’ quickly,” Innes stated, including that this was a little bit of a saw-off for oil markets.

In the meantime, peak summer season gasoline demand in the US continued to offer a flooring to costs.

The U.S. posted a file fall in strategic crude reserves at the same time as business shares rose final week, knowledge from the Power Data Administration (EIA) confirmed on Wednesday.

U.S. gasoline shares unexpectedly dropped, indicating resilience in demand for the motor gas throughout peak summer season regardless of sky-high pump costs.

“It’s exhausting to see important draw back within the coming months, with the gasoline market prone to solely tighten additional as we transfer deeper into driving season,” stated ING’s head of commodities analysis Warren Patterson.

EIA’s knowledge confirmed that obvious demand for all oil merchandise in the US rose to 19.5 million barrels per day (bpd) whereas gasoline demand rose to eight.98 million bpd, ANZ analysts stated in a word.

Efforts by OPEC+ oil producers to spice up output are “not encouraging,” UAE vitality minister Suhail al-Mazrouei stated on Wednesday, noting the group was at the moment 2.6 million bpd wanting its goal.