Oil prices muted after weak Chinese PMIs, Brent set for positive June
2023.06.29 23:39
© Reuters.
Investing.com– Oil prices kept to a tight range on Friday as soft Chinese data pointed to persistent economic headwinds in the world’s largest oil importer, although Brent was still on course for its first positive month in 2023.
Chinese PMIs weaken in June, economic recovery in question
China’s – a key economic driver in the country- shrank in June, while also grew less than expected, government data showed on Friday.
The readings indicated that a post-COVID economic recovery in China exhibited few signs of picking up, despite repeated stimulus measures from Beijing.
Weak economic readings from China largely undermined bets that a recovery in the country will drive global oil demand to record highs this year.
But the weak data also brings up the potential for more stimulus measures from Beijing, as the government struggles to shore up slowing economic growth. The People’s Bank of China has consistently injected cash into the economy to stimulate growth this year, and recently cut interest rates for the first time in ten months.
rose 0.1% to $74.60 a barrel, while were flat at $69.90 a barrel by 22:07 ET (02:07 GMT). But both contracts were set to add between 2% and 3% for June, with Brent marking its first positive month this year.
Oil markets limited by Fed fears, PCE inflation awaited
But while both Brent and WTI were set to gain in June, they were still trading lower for the year, amid uncertainty over how crude demand will play out in the second half of the year.
Oil markets saw wild swings as optimism over tightening supplies and U.S. economic strength was largely offset by hawkish signals from the Federal Reserve and other major central banks.
U.S. logged a much bigger-than-expected draw over the week to June 23, which helped oil prices log some gains this week.
But a strong upward revision in first-quarter data offered little support to oil markets, as traders feared that resilience in the economy gives the Fed more headroom to keep raising rates.
Focus is now – the Fed’s preferred inflation gauge- for more cues on how the bank plans to tighten policy this year.
Fears that rising interest rates will erode economic growth, and in turn oil demand, have largely offset any optimism over tightening supplies this year.
