Brent rises as China pledges to restore consumption

The front-month ICE Brent contract has gained $1.70/bbl on the day, to $80.26/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent has moved up amid renewed optimism about recovery in Chinese oil demand. China's highest economic planner, National Development and Reform Commission (NDRC) has pledged to roll out policies to “restore and expand” consumption in the world’s biggest oil importing nation, Reuters reports.   

Additionally, data from the American Petroleum Institute (API) showed that the US crude, distillate, and gasoline inventories declined last week, according to a Reuters report.

US crude oil inventories fell by 800,000 bbls in the week ended 14 July, as per the latest API data. Meanwhile, market analysts were expecting a larger draw of around 2.3 million bbls. “The (API) numbers were fairly neutral,” said ING’s market analyst Warren Patterson.

The more widely followed Energy Information Administration (EIA) report will be released later today.

Downward pressure:

Oil prices felt some downward pressure after China reported weaker-than-expected gross domestic product (GDP) figures last week.

“The bullish oil thesis was again kneecapped by the ongoing deterioration in China's growth fundamentals,” said SPI Asset Management’s analyst Stephen Innes. “The major fear is that signs of slowing in the broader economy will begin to impact transport demand,” he noted.

A slight recovery in the US dollar has added to the downward pressure on oil, Patterson said. “Supply concerns have also eased, with both the Sharara and El Feel oil fields in Libya reportedly resuming after a brief shutdown last week due to protests,” he added in a note.

By Aparupa Mazumder

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