Oil prices edged up Thursday, supported by lower U.S. stockpiles and record Chinese diesel exports, but worries over Asia’s biggest economy continued to weigh.
A 1.7-million barrel drop in U.S. stockpiles last week helped to at least temporarily halt a price slide that has seen WTI and Brent lose over a quarter of their value since May.
A relatively bullish outlook by the International Energy Agency (IEA) on Wednesday also supported prices.
U.S. crude CLc1 was trading at $43.50 per barrel at 0625 GMT, up 20 cents. Brent futures LCOc1 were 30 cents higher at $49.96 a barrel.
“Although we are seeing support, we remain skeptical over how long this support could last. Bearish momentum is still extremely strong,” Singapore-based brokerage Phillip Futures said on Thursday.
The IEA said global oil demand growth in 2015 would be the strongest in five years, although it added that global oversupply would last through 2016.
Energy consultancy FGE said on Thursday that record Chinese diesel exports of 166,000 barrels per day (bpd) in June were supporting crude demand as its refiners buy more crude oil to produce fuel.
ALL IS NOT WELL IN CHINA
Yet analysts said there were doubts around how long China’s strong demand would last as its economy slows sharply forcing Beijing to devalue its currency and potentially denting demand for fuel imports.
China’s implied oil demand fell in July from the previous month amid a continuing drop in its vehicle sales that could mute growth further in the second half of 2015.
China consumed roughly 10.12 million bpd of oil in July, down over 4 percent from June.
The fall came as Chinese auto sales dropped 7.1 percent in July from a year earlier, the fourth straight monthly decline.
“All is not well with the Chinese economy,” Howie Lee of Phillip Futures told the Reuters Global Oil Forum.
“There is so much pessimism attached to this move (yuan devaluation). For China to start a fresh currency war… smacks of desperation,” he added.
China’s yuan weakened again on Thursday as the central bank tried to slow a selloff that saw it lose 4 percent in two days.
Dylan Mair, head of IHS Energy Technical Operations, Asia-Pacific, said on Thursday that the he expected Brent to average $54.61 per barrel in 2015, and $60.48 next year, while WTI would be $49.31 and $54.50 per barrel for this year and in 2016, respectively.
Source: Reuters
