Singapore: Oil prices fell toward $72 a barrel on Friday, as investors locked in gains from a near eight-month high settlement a day ago, but stronger-than-expected China factory output and retail sales data lent support.
Hopes of an economic recovery had boosted oil to its high on Thursday, and official data showing a rebound in China’s industrial growth and retail sales in May added to the positive economic picture.
By 8:00am, US crude fell 26 cents to $72.42 a barrel, after peaking on Thursday at $73.23. London Brent crude fell 44 cents to $71.35.
“The worst is over for the Chinese economy. However, industrial output growth will remain low until the end of the third quarter relative to the levels a year earlier, due partly to weak exports,” Hao Daming, senior analyst at Galaxy Securities in Beijing, said.
Crude on Thursday settled at its highest since 20 October after a three-day rally, as the International Energy Agency revised upwards its outlook for global oil demand, and US data showed a pick-up in retail sales and slowdown in jobless claims.
The Organization of Petroleum Exporting Countries (Opec) will issue its monthly report later on Friday.
Amid growing hopes for the economy, Bank of Canada Governor Mark Carney warned against excess optimism over “green shoots”, saying there was no evidence yet of a sustainable global recovery.
“Economies are going to grow initially because of the scale of monetary and fiscal stimulus, not in spite of it... and self-sustained private demand is not yet there,” he said.
Hopes of an economic recovery have seen crude prices more than double from the lows near $30 a barrel plumbed late last year, and worries over tightening gasoline supplies ahead of the US driving season gave an extra boost this week, bringing oil up nearly 6 percent from last week’s close.
Valero said on Thursday it will shut its refinery on the Caribbean island of Aruba for the summer due to weak profit margins.
The US has already been hit by a spate of refinery outages in recent weeks, including fires at Sunoco’s plant in Marcus Hook, Pennsylvania, and Flint Hills’ plant in Corpus Christi, Texas.