Perth: Oil steadied at above $61 a barrel on Thursday, after gaining 3.4% in the previous session, as investors remained cautious about the pace of global economic recovery despite positive economic growth numbers from China.
While better-than-expected gross domestic product (GDP) growth from China, the world’s No. 2 energy consumer, should have been supportive of crude prices, analysts said persistent worries about underlying weak energy demand weighed on sentiment.
US oil for August delivery dipped 13 cents to $61.41 a barrel, after gaining 3.4% on Wednesday. London Brent crude nudged up 16 cents to $63.25.
“There’s no doubt that the Chinese GDP numbers are positive and would provide an underlying support for crude,” said Victor Shum, a Singapore-based analyst at Purvin & Gertz.
“But sentiments are still cautious and investors are also somewhat sceptical of an economic recovery anytime soon, particularly in the US, where unemployment is still very high.”
China’s annual gross domestic product growth accelerated in the second quarter to 7.9% from 6.1% in the first, beating analysts’ forecast for a growth rate of 7.5% and making it the best-performing major economy in the world.
But despite the positive growth numbers, the ministry said the base for recovery was still weak and growth momentum was unstable.
Oil’s gains on Wednesday came after the Energy Information Administration (EIA) said commercial crude oil stocks fell 2.8 million barrels last week, against a forecast of a 1.6 million barrel drop from analysts polled by Reuters.
A rally in the equities markets, along with a weak US dollar, which traded near a one-month low against major currencies, also supported oil prices.
Analysts said investors will be keenly watching the weekly US jobless claims data due to be released later on Thursday, as well as the Philadelphia July business activity survey and the National Association of Home Builders July housing market index to gauge how the world’s largest economy was faring.
Oil prices have lost 12% so far this month and dropped to a near two-month low of around $58 a barrel earlier this week, amid mounting worries that a economic rebound may not be coming soon enough to help spur flagging fuel demand.
“If oil prices can hold on to their recent gains and go higher over the next couple of days, then we might be able to break out of this $58-$61 band,” said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
Separately, Opec could cut output at a meeting in September if oil falls below $50-$55 a barrel, a member of Kuwait’s Supreme Petroleum Council said on Wednesday.