Oil prices rise after Chinese trade data

8th September 2015, Comments 0 comments

Oil prices rose Tuesday after better-than-expected Chinese trade data that nonetheless showed lacklustre demand in the world's top energy consumer.

US benchmark West Texas Intermediate for delivery in October edged up five cents to $46.10 a barrel.

The contract was playing catch-up with Brent after low-volume trading Monday owing to a public holiday in the United States.

Brent North Sea crude for October jumped $1.84 to stand at $49.47 a barrel in late London deals.

Following rallies on equity markets, Brent "managed to rebound noticeably after staging a 2.5-day sell-off that began at the end of last week", said Fawad Razaqzada, analyst at Gain Capital trading group.

He noted also that "concerns about China have also eased somewhat after exports from the world's second largest economy were better than expected last month".

On Tuesday, the Chinese customs administration said overseas shipments in August fell 5.5 percent from a year earlier -- which was less of a drop than analysts had expected. This compared with a fall of 8.3 percent in July.

Imports dropped 13.8 percent, from an 8.1 percent decrease in July.

"This data just reinforces the view we are still seeing weakness in the Chinese economy and this data point suggests we have not seen a bottom yet," Bernard Aw, market strategist at IG Markets, told AFP.

"China's economy remains a worry for the wider world economy and global asset markets," he added.

The data was the first in a string of economic figures this week that will be used as a barometer of the state of the Chinese economy, the world's second-biggest and a crucial driver of global growth.

Oil prices have come under pressure from concerns that China's slowing economy will curb demand for the commodities that have helped feed its astonishing growth over the past three decades.

The devaluation of the yuan on August 11 fuelled economic fears, sparking a slump in world equities sending commodities, as measured by the Bloomberg Commodity Index of 22 raw materials, to a 16-year-low before stabilising near current levels.

Oil prices are down almost 30 percent from this year's closing peak in May.

Analysts said dealers would next scrutinise the weekly US stockpiles report due Thursday.

US commercial crude reserves currently sit near an eight-decade peak owing to high production levels despite tepid demand.

Dealers had been hoping that an uptick in US demand, coupled with a slowdown in output, could whittle down the huge global supplies that were a key reason for the collapse in prices since the middle of 2014.

© 2015 AFP

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