Traders Maintain Faith In China Despite Headwinds, Oil Rises Again
Meanwhile, Russian oil continues to find its way to Asia: File Image/Pixabay
A weak U.S. dollar combined with price hikes for Saudi oil and continued optimism over demand recovery in Chinacontributed to crude prices eking out another round of extremely modest gains on Monday – despite the latest news from China being somewhat less than positive.
In fact, earlier in the session both Brent and West Texas Intermediate incurred losses when it was learned that China on Sunday set a 5 percent gross domestic product growth target for this year, down from last year's 5.5 percent target and falling short of expectations for a 6 percent growth.
Also, China's GDP grew last year by only 3 percent, causing premier Li Keqiang to state that insufficient demand remained a pronounced problem and expectations of private investors and businesses were unstable.
Rebecca Babin, senior energy trader, CIBC Private Wealth
Crude is breaking out of its recent trading range
Still, it was said that analytical optimism over China's long term recovery remained intact, with Torbjorn Tornqvist, CEO of Gunvor, speculating that crude prices may rise in the second half of the year as a result.
After Saudi Arabia on Monday disclosed it was raising prices for the flagship Arab light crude it sells to Asia for a second month in April, Brent settled up 35 cents at $86.18 per barrel.
WTI rose 78 cents to settle at $80.46 per barrel.
Another factor contributing to trading activity was Scott Sheffield, CEO of Pioneer, who said that oil production in the Permian Basin of the U.S. will peak in five to six years.
Rebecca Babin, a senior energy trader at CIBC Private Wealth, said, "Crude is breaking out of its recent trading range on what started out as a bearish day on the heels of China's 5 percent GDP target."
In other oil related news on Monday, data compiled by Bloomberg showed that almost 30 million barrels of Russian Urals have been moved between tankers so far this year, and a large amount continues to be transferred between tankers just a few miles off the coast of Spain, despite authorities reminding companies that such activity is prohibited.
The news agency disclosed that Ceuta accounts for about 43 percent of these activities, and Kalamata in Greece almost all the rest; the cargoes were then transported to Asia.
Expectations of more interest rate hikes from the Federal Reserve will likely be a key influencer in trading in the days to come, with investors monitoring jobs data and speeches from Fed Chair Jerome Powell for clues on just how severe the next round of hikes will be.