Singapore: Oil was steady below $84 on Thursday after soaring US inventories signalled demand in the world’s top energy user is lagging the recovery in the global economy.
The International Monetary Fund on Wednesday said the world’s recovery from recession had been quicker than expected, raising forecasts for growth this year, while China reported robust oil imports in March.
But crude inventories in the United States rose unexpectedly last week, government statistics showed on Wednesday, while fuel supplies climbed more than forecast.
“The unexpected increase in crude inventories speaks of a bearish outlook,” said Serene Lim, a Singapore-based oil analyst at ANZ. “Demand has not really kept up with the economic recovery.”
US benchmark West Texas Intermediate crude for June fell 5 cents to $83.63 a barrel by 0642 GMT. The front-month contract reached an 18-month high above $87 on 6 April.
WTI prices are under pressure from last week’s 1.8-million-barrel stockpile gain at the Cushing, Oklahoma, pricing point reported by the Energy Information Administration, which accounted for most of the 1.9-million-barrel increase logged at a national level.
For chart watchers, US crude is bound to continue in a falling trend, targeting $82 a barrel.
At more than 34 million barrels, landlocked crude inventories at Cushing are nearing the level at which they trigger a disconnection of WTI from global oil markets.
ICE Brent crude for June was trading about $2 higher than WTI on Thursday, up 5 cents at $85.75 a barrel after rising a day earlier on data showing strong Chinese demand and diverging from falling US crude.
China leads, US lags
China’s apparent oil demand in March rose 12.3% from a year earlier, the seventh double-digit increase in a row, Reuters calculations showed from official data released on Wednesday.
“There could be some support from Chinese demand, looking at how strong the economic growth is,” Lim said. “There is high demand because of the spring seasonal peak from agriculture.”
Rising consumption in China, the world’s second-largest oil user, has helped support crude prices as demand from developed economies struggles to rebound from the recession.
US demand for distillates including heating oil and diesel fell 0.1% in the past four weeks from a year earlier, the EIA said. Inventories climbed 2.1 million barrels to 148.9 million barrels, eclipsing a forecast rise of 800,000 barrel.
And gasoline stocks rose 3.6 million barrels to 224.9 million barrels, by far topping projections by analysts polled by Reuters who had forecast a build of 400,000 barrels.
The dollar was down 0.08% against a basket of currencies on Thursday. Unease among investors over the Greek debt saga on Wednesday sapped the euro, while the yen gained.