On Wednesday, oil prices continued to rise after a significant increase in manufacturing in China, the top consumer of crude, improved expectations for world fuel consumption.
At 0445 GMT, May Brent crude futures were up 46 cents, or 0.6%, to $83.91 per barrel. West Texas Intermediate (WTI) crude for the United States increased by 42 cents or 0.6% to $77.47 a barrel in April.
Expectations for a significant increase in demand in China, the world’s second-largest consumer of crude oil, continue to support oil prices.
Yeap Jun Rong, market strategist at IG, stated that “another round of upside surprise in China’s PMI further offers conviction of a stronger-than-expected rebound, which supports a more bullish oil demand forecast.”
After (Monday’s) previous sell-off, “that provided a much-needed catalyst for oil prices to tap on for some relief,” Yeap continued. “China’s recovery is showing to be on track to cushion some of the global demand weakness from hawkish central banks.”
According to data from the purchasing managers’ index (PMI) released on Wednesday by Caixin/S&P Global, manufacturing activity in China increased in February for the first time in seven months.
On Wednesday, official government PMI numbers were also released, showing that February saw the manufacturing sector’s highest expansion since 2012.
The United States, the world’s largest oil consumer and producer, showed signs of increasing crude stocks, which negated the positive demand signal.
According to market sources quoting American Petroleum Institute (API) data on Tuesday, the United States’ oil stocks increased by 6.2 million barrels in the week ending February 24.
But, according to the API statistics, gasoline stockpiles fell by 1.8 million barrels and distillate fuels, such as diesel and jet fuel, fell by 340,000 barrels.
Later on Wednesday, the official U.S. government is expected to release stockpile numbers.
The report is predicted to indicate a 10th straight week of building, with analysts in a Reuters poll estimating that a rise of about half a million barrels happened last week.
Data from the Organization of the Petroleum Exporting Countries also revealed more indications of an increase in supplies (OPEC).
According to a Reuters survey, OPEC produced 28.97 million barrels per day (bpd) in February, an increase of 150,000 bpd from January. More than 700,000 bpd less output was produced in September.
