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Oil steady as downbeat Chinese data offset demand hopes

Monday, 17 June 2024 | 13:00

Oil was steadyon Monday after Chinese economic data underscoring a bumpy recovery for the world’s biggest crude importer offset hopes for a boost to demand from the summer driving season in the northern hemisphere.

Apart from retail sales that beat forecasts due to a holiday boost, the flurry ofChinese data on Monday was largely downbeat. The data followed a survey on Friday showingU.S. consumer sentiment fell to a seven-month low in June.

Global benchmark Brent crude futures LCOc1 were up 6 cents at $82.68 a barrel at 0805 GMT. U.S. West Texas Intermediate crude futures CLc1 added 2 cents to $78.47.

Last week, both benchmarks posted their first weekly gain in four weeks on elevated confidence that oil inventories are set to plunge as the summer season gets under way in the northern hemisphere.

“The move higher was not unreservedly convincing,” said Tamas Varga of oil broker PVM of last week’s gains. “Further weakness is observed this morning due to sluggish Chinese factory activity.”

Reports from OPEC and the International Energy Agency last week, although differing on the strength of oil demand growth this year, had supported confidence that inventories would be drawn down in the second half.

“Last week’s robust rally was fuelled by forecasts of strong 2024 demand from OPEC+ and the IEA. However, given OPEC’s vested interest in crude oil, there is some scepticism around OPEC’s forecasts,” said Tony Sycamore, a market analyst at IG in Singapore.

“Friday’s soft U.S. consumer confidence numbers suggest that the resilience of the American consumer and the U.S. economy will be tested as households run down their savings to combat higher interest rates and cost-of-living pressures,” he added.

On the geopolitical front, concerns of a wider Middle East war lingered after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation.

Markets in key oil trading hub Singapore and other countries in the region were closed for a public holiday on Monday.
Source: Reuters (Additional reporting by Mohi Narayan in New Delhi and Colleen Howe in Beijing; editing by Jason Neely)

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