2023-07-18 11:09:19
Oil prices rose once more on Tuesday, benefiting from the weakness of the dollar and the return of investors’ appetite for risk, despite worrying Chinese demand.
Around 10:45 a.m. GMT (12:45 p.m. in Paris), a barrel of Brent from the North Sea for delivery in September took 0.34% to 78.77 dollars. Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in August, gained 0.43% to 74.47 dollars.
The weakness of the dollar benefited oil, as the depreciation of the American currency encourages purchases of crude, denominated in greenback, making them more attractive for buyers using other currencies by increasing their purchasing power. Investors are also evaluating the fundamentals of the market, which is expected to be undersupplied for the second half of the year, especially with production cuts from Russia and Saudi Arabia, two major crude producing countries.
However, crude’s gains remain capped by concerns over Chinese demand. China’s growth in the second quarter of 2023 indeed fell to 0.8%, following rising 2.2% over the January-March period, according to figures released on Monday.
“The main fear is that signs of a slowdown in the economy in general are starting to have an impact on the demand for (fuel for) transport”, explains Stephen Innes, analyst at SPI AM. China, the world’s largest crude importer, “is the main engine of growth in oil demand, accounting for 60% of the global increase (in demand) expected this year”, continues the analyst.
“Data from the customs authorities (from China) show that imports of crude oil reached 12.7 million barrels per day”, however tempers Carsten Fritsch, of Commerzbank, thus showing a still resilient demand for the moment, even if it is “likely that China imported more than its demand”.
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