Improved China, U.S. Data Bolsters Oil - But Prices Stubbornly Range Bound

by Ship & Bunker News Team
Friday May 17, 2024

Crude prices on Friday achieved modest daily and weekly gains, the former due to indications that demand for oil will improve in China as well as the U.S.

Brent settled up 71 cents at $83.98 per barrel and logged a 1 percent gain for the week, while West Texas Intermediate settled up 83 cents to $80.06 and rose 2 percent for the week.

Traders responded to news that China's industrial output rose 6.7 percent year-on-year in April, as well as to a vow from the central government that it would work to stabilize its troubled property sector.

In the U.S., consumer prices rose less than expected in April (a 0.3 percent increase compared with expectations of a 0.4 percent increase), which in turn bolstered hope for rate reductions soon; and the U.S. Commodity Futures Trading Commission reported that money managers raised their net long U.S. crude futures and options positions in the week to May 14.

But even though oil ended the week higher, Bloomberg pointed out that "conflicting factors resulted in a tight weekly range, with Brent volatility falling to the lowest since March."

Also, there was lingering disappointment in U.S. driving figures: the AAA called pre-Memorial Day demand "lackluster", with gas demand last week rising minimally, from 8.79 million barrels per day (bpd) to 8.87 million bpd.

In other oil news on Friday came a disclosure of yet another way the sanctions on petroleum products from Russia are being circumnavigated: the Centre for Research on Energy and Clean Air and the Center for the Study of Democracy revealed that the European Union has imported EUR 3 billion worth of Russian oil products from ports in Turkey that don't have refining hubs and are viewed as re-export hubs.

These hubs imported 86 percent of their oil from Russia shortly after the implementation of the sanctions on February 5, 2023 and until the end of February 2024; the rerouting, in addition to avoiding the sanctions, has generated significant tax revenues for Russia, estimated at EUR 5.4 billion.