Oil prices climb as China, U.S. economic data lift markets

Brent crude futures for July were at $68.40 a barrel by 0616 GMT

  
Image of gas station used for illustrative purpose.

Image of gas station used for illustrative purpose.

REUTERS/ krisanapong detraphiphat

SINGAPORE  - Oil prices recovered after a 1% dip in the previous session on buoyant economic data from China and the United States, even as the surging COVID-19 pandemic in India capped prices.

Brent crude futures for July were at $68.40 a barrel by 0616 GMT, up 31 cents, or 0.5%, while U.S. West Texas Intermediate (WTI) crude for June rose 29 cents, or 0.5%, to $65.

Both Brent and WTI are on track for a second weekly gain as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand, while pent-up summer travel is likely to give gasoline and jet fuel consumption a further boost.

In China, data showed export growth unexpectedly accelerated in April while a private survey pointed to a strong expansion in service sector activity. 

However, crude imports of the world's biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day, the lowest since December. 

"The import figure isn't the best," said economist Howie Lee at Singaporean lender OCBC, adding that a fall in operating rates at independent refiners in the eastern Chinese province of Shandong last month may have caused the decline.

"It is, however, still too early to call for an end to China's commodity binge, as evident in the import numbers of iron ore and copper," Lee said.

In the United States, the world's largest oil consumer, jobless claims have dropped, signalling the labour market recovery had entered a new phase amid a booming economy. 

However, oil demand recovery has been uneven as surging COVID-19 cases in India has reduced fuel consumption at the world's third-largest oil importer and consumer. 

"India remains the weak link in the oil rally narrative," OANDA's senior analyst Jeffrey Halley said.

Resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of that lost demand has been offset by countries such as China where recent Labour Day holiday travel surpassed 2019 levels.

"Gasoline demand in the U.S. and parts of Europe is faring relatively well," FGE said.

"Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season."

(Reporting by Florence Tan; Editing by Christopher Cushing and Kim Coghill) ((Florence.Tan@thomsonreuters.com; Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))

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