Singapore: Oil pared losses and held above $74 after data showing Chinese overall exports surged in May offset weaker demand readings in top consumer the United States.
China’s exports rose 48.5% in May from a year earlier, the General Administration of Customs said on Thursday, beating forecasts of a 32% gain and confirming a Reuters report on Wednesday on the export figure which helped send oil up more than 3%.
Investors on Thursday were “profit taking” after prices on Wednesday approached “resistance” at $75 a barrel, a level not surpassed since 4 June, said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
US crude for July was at $74.22 a barrel at 9:00am, down 16 cents from Wednesday’s close, after trading as low as $73.72 before the exports data came out. ICE Brent declined 28 cents to $73.99.
China will release May industrial production data on Friday, forecast at 17.1% in a Reuters survey, down from a 17.8% gain in April. As in the case of exports, investors will look for evidence that the economy of the world’s second-largest oil user keeps roaring ahead.
“If we continue to see a follow through in the data tomorrow, that will be the litmus paper test to show that China is with us and that growth remains robust,” Barratt said.
Prices of US crude have recovered almost $10 from below $65 on 20 May, but are still down 15% from a 19-month peak on 3 May.
US crude inventories last week dropped a larger than expected 1.8 million barrels, the Energy Information Administration (EIA) said on Wednesday.
That was the same amount by which stockpiles of distillates including heating oil and diesel increased as distillate demand slowed, showing a gain of 9.3% in the four weeks ended 4 June , compared to 17% in the four weeks to 28 May.
“Refiners ran more crude, which was bullish,” said Mike Wittner, head of oil research at Societe Generale in London, in a note to clients.
“However, this put downward pressure on an already well supplied distillate market. Weekly distillate demand ran out of steam and couldn’t absorb the growing supply.”
US gasoline supplies were little changed last week, the EIA said.