Oil Rises Despite Weak Economic Growth in China
Oil prices rose off three-month lows early on Friday even after China reported the weakest economic growth in two years as the focus returned to tight supplies. The United States, China and India are the top oil consumers, thus a decline in economic activities pose threat to crude demand.
Market data shows that West Texas Intermediate (WTI) crude for August delivery was last seen up $1.46 to $97.24 per barrel, while September Brent crude, the global benchmark, was up $1.74 to $100.84, signalling a recovery from the previous downturn.
According to trading data, crude oil prices fell to the lowest since April on Thursday as recession worries dominated trading following the day-prior release of US data.
The consumer price index shows that U.S inflation rose to a 41-year high last month, boosting expectations the Federal Reserve may raise interest rates by as much as a full percentage point when its policy committee meets later this month to slow the economy.
However, worries over a demand-destroying recession are being matched with a tight physical market, with premiums being demanded immediate supplies. READ: FOREX: US Dollar Slides from Three-Month High
“We, and many of our peers, have continued to point out the significant disconnect between the financial and physical market. The former is pricing in a recession while the latter is pricing in scarcity,” RBC Capital Markets commodity strategist Michael Tran said in a note.
China reported its economy grew by just 0.4% in the second quarter as lockdowns on Shanghai and other centres damaged growth, even as it recently reintroduced mass testing in the city that could lead to fresh lockdown measures as the country continues its zero-Covid policies.
Still, the US on Friday reported retail sales rebounded in June, rising 1% after dropping 0.1% a month earlier and showing a recession has not yet taken hold in the country. # Oil Rises despite Weak Economic Growth in China
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