WSJ: Oil Prices Barely Move After China Economic Data
LONDON—Oil prices fluctuated on Wednesday as investors were weighing improving economic data from China against signs of a continuing supply glut in the U.S.
Saudi Arabia’s influential oil minister, Ali al-Naimi, said on Wednesday that oil demand was growing and that markets have calmed in his first public comments since December.
Oil prices have stabilized in recent weeks after a rally from their mid-January lows. But analysts are still cautious to call a bottom after crude’s dramatic fall last year because global supply is still overshooting demand.
April-dated Brent crude fell 0.1% to $58.58 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $49 a barrel, down 0.6% from Tuesday’s settlement.
“Why do you want to rock the markets? The markets are calm... Demand is growing,” Mr. Naimi told reporters on the sidelines of a conference in Saudi Arabia.
The Saudi-led Organization of the Petroleum Exporting Countries decided last year to keep its output targets stable in a bid to defend its market share, which exacerbated the rout in prices.
As a sign of improving demand, the latest manufacturing gauge in China, the world’s second biggest oil consumer, showed a modest improvement in February. The preliminary HSBC China Manufacturing PMI rose to 50.1 compared with a final reading of 49.7 in January, data showed.
But on the supply side, the glut of oil in the U.S. shows little signs of abating. Late Tuesday, the American Petroleum Institute said U.S. crude stocks rose by a large 8.9 million barrels last week.
The U.S. Energy Information Administration will publish its official data later on Wednesday and analysts expect oil stocks to have increased by 4.7 million barrels. The EIA will also release data on U.S. oil production, which is currently running at a multiyear high of around 9.3 million barrels a day.
“Unless production drops to below 9 million barrels a day, we do not expect this oversupply issue to end,” Daniel Ang, analyst at Phillip Futures, wrote in a note to clients.
In its February report, the BlackRock Investment Institute said the oil price could fall below $45 a barrel but the market appears close to a bottom based on past peak-to-trough declines,
“We expect a modest recovery next year, but think a return to $100-plus prices is far-fetched due to advances in drilling technology,” BlackRock said. It estimated that the current oil oversupply stands at around 2% of global oil demand—the highest level since the Asia crisis of the late 1990s.
Nymex reformulated gasoline blendstock for March—the benchmark gasoline contract—fell 0.9% to $1.6050 a gallon, while ICE gasoil for March changed hands at $570 a metric ton, down $9.25 from Tuesday’s settlement.
