WTI and Brent futures traded slightly higher during early hours in Europe today. China, the worlds second-top oil consumer, revealed concerning data on Sunday, but traders continued to bet bullish, backing on robust US economic data, and falling crude oil supplies in the States, ahead of driving season. Investors now eye key economic reports from China, due tomorrow, and more US data later in the week.
West Texas Intermediate futures for settlement in July traded for $102.85 per barrel at 6:45 GMT on the New York Mercantile Exchange, up 0.19%. Prices ranged from $102.62 to $102.92 per barrel. On Friday WTI closed relatively unchanged for the week, at $102.71 per barrel.
Meanwhile on the ICE in London, Brent futures due in July stood for a 0.08% gain at $108.70 per barrel at 6:46 GMT. Daily high and low stood at $108.78 and $108.55 per barrel, respectively. Brent’s premium to WTI stood at $5.85, on par with Fridays closing margin of $5.90. Last week the EU benchmark dropped about 0.5%.
“The economic data we’ve been getting have been a positive factor for the oil market,” Will Yun, commodities analyst at Hyundai Futures Co. in Seoul, said for Bloomberg. “There are positive developments on both the demand and supply sides, which gives support to crude prices at the moment.”
China data
Early on Sunday, China revealed foreign trade data. Exports beat forecasts to log a 7.0% annual growth for May. However, imports surprisingly dropped to -1.6% on an yearly basis, down from -0.8% for April, and well below expectations for a 6% growth standing. Slackening imports can be translated into sluggish domestic consumption for China, which accounts for 11% of total oil demand.
“There are still concerns over China’s domestic demand,” Will Yun added for Bloomberg. “Determining whether or not China is recovering is something we’ll need to wait and see.”
Furthermore, crude oil imports for the month declined by more than 9%, after a record high in April.
Tomorrow Chinas government will reveal data, which will probably reinforce the somewhat gloomy domestic picture. CPI for May is forecast at a -0.1% on a monthly basis, after -0.3% for the previous month, while on an annual basis consumer prices have probably increased by 2.4% in May, after 1.8% in April. Also, Chinese PPI for May will be reported, and analysts expect a standing of -1.5%, after -2.0% in April.
Later this week, Chinese industrial production for May will be posted on Friday. Experts suggest a steady 8.8% growth year-on-year, after 8.7% in April. Also due on Friday, reports on fixed assets investments and retail sales for May are expected to reveal steady annual growth for both.
US
On Friday, the US, which accounts for 21% of total oil consumption, revealed bright employment data for May. New nonfarm payrolls stood at 217 000, as predicted, after 288 000 were added in April. Unemployment rate stood same as last month at 6.3%, which is the lowest level since September 2008, beating expectations of a slight increase.
“The jobs number is being perceived as a positive sign for the overall economy and bullish for demand,” said for Bloomberg Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York.
Later this week more key data is due. Retail sales are expected to post a preliminary 0.4% monthly growth for May, after muted 0.1% increase the previous month.
On Friday PPI for May will be revealed. Analysts project a 0.3% gain on a monthly basis and 1.9% year-on-year.
Previously, last Wednesday’s Energy Information Administration (EIA) report on US oil inventories for the week through May 30 revealed a sizable drop for commercial crude supplies. Stockpiles were reported to have lost 3.4 million barrels, with a massive weekly drop for imports for a second week, which now have decreased by almost 1.5 million barrels per day (bpd) since mid May.
Crude in storage at Cushing, Oklahoma, declined by a further 0.3 million, while hubs at the Gulf Coast also logged a sizable drop of 6 million barrels.
Meanwhile, gasoline inventories added 0.2 million barrels, while distillate fuels supplies grew by more than 2 million.
Technical view
According to Binary Tribune’s daily analysis, in case the West Texas Intermediate July future on the NYMEX breaches the first resistance level at $103.05, it probably will continue up to test $103.45. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $103.82.
If the contract manages to breach the first key support at $102.28, it will probably continue to drop and test $101.91. With this second key support broken, the movement to the downside will probably continue to $101.51.
Meanwhile, July Brent on the ICE will see its first resistance level at $109.13. If breached, it will probably rise and probe $109.64. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.98.
If Brent manages to penetrate the first key support at $108.28, it will likely continue down to test $107.94. With the second support broken, downside movement may extend to $107.43 per barrel.
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