Bullish GDP Growth Transforms Bearish Oil Traders And Causes Price Gainste

Meanwhile, PetroChina Co.'s earnings rise on stronger oil prices: File Image/Pixabay

Oil traders on Thursday clung to their nascent optimistic sentiments after Washington disclosed that gross domestic product rose at a 2.6 percent annualized rate last quarter after falling in the first half of the year – and as a result, West Texas Intermediate settled at a two-week high.

Brent settled up $1.27, or 1.3 percent, to $96.96 per barrel while WTI settled up $1.17, or 1.3 percent, to $89.08 per barrel, and speculation that central banks could be nearing the end of rate-hiking cycles added support.

However, equity markets dropped in a show of skepticism over the backward-looking numbers, and only in the oil sector was a sudden switch from bearish to bullish sentiment considered normal, with John Kilduff, founding partner at Again Capital, remarking, "This GDP number is solid, just solid…a lot of folks were trying to make a recession call and it's obvious that we're not in it."

The news comes at a time when total U.S. petroleum exports hit a record 11.4 million barrels per day (bpd) last week while domestic fuel inventories are at historic seasonal lows.

It also seems that geopolitical tensions may lessen to a degree with the U.S. and the European Union appearing likely to settle for a more loosely policed price cap limit on Russian oil than originally envisioned – although this scenario could be regarded as yet another unintended win for the former Soviet Union, whose economy has displayed remarkable resiliency in the face of Western hospitality for its invasion of Ukraine.

Even zero Covid tolerance-plagued China had good news to report on Thursday: PetroChina Co.'s third-quarter earnings rose on stronger oil prices, to the tune of 37.88 billion yuan ($5.3 billion) in net income for the three months through September; that's up 71 percent from the same period in 2021.

PetroChina also produced 677 million barrels of crude oil in the first three quarters, up 2.2 percent from the previous year, and cleaner-burning natural gas enjoyed a 5 percent output increase.

Still, Hiroyuki Kikukawa, general manager of research at Nissan Securities, pointed out that, "Concerns that China's muddled economic policies may continue under President Xi Jinping's growing power weighed on sentiment."

But for the main analysts enjoyed Thursday's unshine, and David Song, strategist at Daily FX exemplified the upbeat tone by noting that "Crude seems to be unfazed by the 2.588M rise in U.S. inventories as it rallies for three consecutive days, and the advance from the September low ($76.25) may turn out to be a key reversal should the price of oil no longer respond to the negative slope in the moving average."