Oil prices have edged up as investors look for more China economic stimulus after weak Purchasing Managers’ Index (PMI) data, partly recovering from losses after a surge in US inventories.
Brent crude futures were up $0.39, at $61 a barrel, while US West Texas Intermediate (WTI) crude futures were up by $0.30, at $55.36 per barrel, reported Reuters.
As per the official data, China’s factory activity declined for a straight sixth month as trade war clouds outlook, while growth in China’s services sector activity recorded the slowest since February 2016.
OANDA senior market analyst Jeffrey Halley was quoted by Reuters as saying: “The move up in oil is driven by the expectation that more China stimulus is now on the way after the six-month low in the China manufacturing PMI.
“The kneejerk response …. was to sell commodities and energy, but central banks globally have itchy trigger fingers at the moment with regards to easing and I believe China will be no different.”
The US Federal Reserve axed interest rates for a third time in 2019. According to the US Energy Information Administration (EIA), crude inventories rose 5.7Mbbls, compared with analysts’ expectations for a build of 494,000 barrels.
Meanwhile, crude stocks at the Cushing, Oklahoma rose by 1.6Mbbls, as reported by EIA. Gasoline and distillate inventories continued to decrease, despite refiners ramping up production.