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Oil prices settle higher on signs of improving China economy; US CPI looms

Published 05/12/2024, 09:31 PM
Updated 05/13/2024, 03:13 PM
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Investing.com-- Oil prices settled higher Monday, as signs of an improving economy in China boosted demand hopes at time when wildfires in China threaten supplies. 

AT 14.30 ET (19:30 GMT), Brent oil futures climbed 0.5%, to $83.21 a barrel, while U.S. West Texas Intermediate crude futures rose 0.8%, to settle at $78.92 a barrel.

Chinese inflation data stokes global growth hopes

Chinese inflation data for April, released over the weekend, showed a sustained recovery in consumer price index inflation, boosted hopes that demand and economy growth continued to recovery following substantial monetary support from Beijing.

China’s oil imports in April had fallen from the prior month, albeit slightly. They were also largely flat from the same period last year, as the country grapples with a sluggish post-COVID economic recovery. 

Alberta wildfire could cut output 

Helping the tone Monday was the news of an evacuation alert for Fort McMurray, Alberta, as an out-of-control fire rages southwest of the major Canadian oil town, making it among the first actions ahead of the wildfire season.

In 2016, a huge wildfire in Fort McMurray forced the evacuation of 90,000 residents and shut in more than a million barrels per day of oil output.

Global supply will remain an issue ahead of June's meeting of the Organization of Petroleum Exporting Countries, and allies, a group of major producers known as OPEC+.

Goldman Sachs said last week, in a note, that it no longer expects OPEC+ to partially reverse recent voluntary production cuts next month, expecting Saudi Arabia's crude oil supply to remain steady at 9 million barrels per day in July, compared to their earlier estimate of 9.2 million barrels per day.

However, there were reports over the weekend that Iraq’s oil minister said that the country would not agree to further supply cuts, and it is not clear whether this refers to a rollover of existing cuts or deeper cuts.  

Dollar unchanged ahead of US CPI inflation data

Crude oil prices were also helped by a weakness in the dollar as investors awaited key inflation data this week, with the producer price index and consumer price index due on Tuesday and Wednesday, respectively.

The data are set to arrive following a string of hotter-than-expected inflation reports in Q1 that forced investors to not only push out rate cut bets but reduce the number of cuts expected to just two for the year. 

(Peter Nurse, Ambar Warrick contributed to this article.)

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