Singapore: Oil was steady above $72 a barrel on Thursday, after rising more than 4% the previous day, buoyed by industry data showing a steep drop in crude imports and stockpiles in top consumer the United States.
The release of US July leading economic indicators and weekly jobless claims - both of which are expected to be mildly positive - could provide further clues on the outlook for the world’s largest economy and set the market’s trading tone.
Sentiment was also bolstered by a 4.5% surge in Chinese stocks on Thursday, as modest signs of official support for the market helped trigger technical buying, following a 20% dive in the two weeks to Wednesday’s close.
By 1:00pm, US crude for September delivery was up 28 cents at $72.70 a barrel, off an earlier session high of $72.78. It had settled $3.23 higher at $72.42 a barrel on Wednesday. London Brent crude for October was unchanged at $74.59.
“The EIA report has been pretty bullish for the market, and will support sentiment in the near term,” said David Moore, commodity strategist with the Commonwealth Bank of Australia.
“But we expect prices to remain volatile, as the overall demand picture remains weak, and as equity markets and the dollar continue to play major roles in influencing trading direction.”
US crude stockpiles plunged by a whopping 8.4 million barrels in the week to 14 August - against analysts’ forecasts for a 1.3 million barrel build - as imports dropped to the lowest level since September 2008 and refiners hiked runs, data from the US Energy Information Administration showed.
Gasoline and distillate stockpiles also showed bigger-than-expected declines.
This confirmed the API data released late on Tuesday which showed a 6.1-million-barrel fall in US crude inventories.
The release of first-time claims for jobless benefits for the week ended 15 August at 6:00pm, and July leading economic indicators at 7:30pm, are expected to show a gradual, nascent recovery in the US economy.
Economists polled by Reuters forecast 550,000 new jobless claims filings versus 558,000 in the prior week, while July leading indicators are seen rising 0.7%, matching June’s increase.
US stocks rose on Wednesday, shaking off a 4.3% slide in China’s equity market, while the dollar fell against the euro and a basket of currencies, as a rebound on Wall Street reduced safe-haven demand for the greenback.
China stocks, viewed by investors as a weathervane of risk sentiment, tumbled to a two-month low on Wednesday on disappointment that Beijing had not taken steps to prop up the market after the key index plunged 20% from two weeks ago.
But the country’s benchmark stock index rebounded on Thursday at the open, after state media reported the stock regulator had approved several mutual funds this week in quiet support for the market.
On the supply front, increased oil output to a year-high from Opec president Angola, flouting agreed limits, has helped stack the odds against any formal change when the producer group meets in September.
Without a sharp slide in crude prices, Opec is likely to leave its output targets unchanged when it meets on 9 September, most Opec delegates and analysts said.
Kuwait also sees no need for Opec to change oil supply targets as the oil price is satisfactory, the country’s oil minister said on Wednesday.
Traders are also keeping an eye on storms in the Atlantic Basin as any potential output disruption could boost prices. But there was no immediate threat seen to US oil installations in the Gulf of Mexico, home to a quarter of US oil output and 15% of its natural gas production.
Powerful Hurricane Bill, a dangerous Category 4 storm with 215 kph winds, raged across the open Atlantic on Wednesday, but posed no threat.