U.S. West Texas Intermediate and International-benchmark Brent crude oil futures are inching higher on Monday shortly before the regular session opening. The range is relatively tight as investors continue to assess the impact of Hurricane Barry on production. Traders are also responding to economic data out of China, which is keeping a lid on prices.
The markets are being underpinned by positive Chinese economic data, which may be sign the economy is responding to the government stimulus efforts and potentially more oil demand from the world’s second largest economy.
China’s crude oil throughput rose to a record of 13.07 million barrels per day in June, up 7.7% from a year earlier, following the start-up of two new, large refineries, official data showed on Monday.
China’s crude imports fell in June for a second straight month, but its oil imports year-to-date still looked impressive.
Perhaps keeping a cap on prices is the news that China’s economy grew just 6.2% in the second quarter of 2019, the worst in 27 years. This signaled that the trade dispute with the United States is negatively affecting the economy. Furthermore, it may be indicating the need for further stimulus.
Impact of Hurricane Barry
Refineries in the path of Hurricane Barry continued to operate after the storm made landfall and weakened. In the Gulf of Mexico, however, production was cut by 73% or 1.38 million barrels per day.
Diplomatic Efforts in the Middle East
In a televised speech on Sunday, Iranian President Hassan Rouhani said that Iran is ready to hold talks with the United States if Washington lifts sanctions and returns to the 2015 nuclear deal it quit last year. Additionally, Britain has offered to facilitate the release of the detained Iranian oil tanker Grace 1 if Tehran gave guarantees that it would not go to Syria.
Despite the sideways to lower trade the past two sessions, both WTI and Brent remain in a position to resume their rallies as long as they hold above their respective 200-day Moving Averages at $59.07 and $66.57.
Taking out these levels with conviction will indicate that hedge funds are pulling support.
Most of the factors that drove prices higher last week were short-term events so if they go away, prices could break. Weighing on prices will be increasing worries over demand as signaled last week by OPEC and the International Energy Agency (IEA).
This article was originally posted on FX Empire
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