Chinese manufacturing output increased in February. Oil prices boosted gains for a second session on Wednesday after strong growth in manufacturing in China, the world’s largest importer of crude oil, strengthened the global fuel demand outlook.
Brent crude futures for May delivery rose 46 cents, 0.6%, to $83.91 a barrel at 0445 GMT. West Texas Intermediate (WTI) crude for April delivery rose 42 cents, or 0.6%, to $77.47 a barrel.
Oil prices continue to be supported by the prospect of a strong recovery in demand in China, the world’s second-largest consumer of crude oil.
Another upside surprise in China’s purchasing managers index (PMI) offers hope for a stronger-than-expected recovery, supporting a more optimistic outlook for oil demand.
With the recovery in China showing that global demand weakness from hawkish central banks is on track to ease, it’s serving as a much-needed catalyst for oil prices to have some relief after previous sales.
Data showed that China’s factory activity increased for the first time in seven months in February, according to the purchasing managers’ index (PMI) released on Wednesday.
Official government PMI data also released Wednesday, showed that the fastest expansion in the manufacturing sector since 2012 occurred in February.
However, the strong demand signal was offset by rising crude oil inventories in the US, the world’s largest oil consumer, and producer.
U.S. oil inventories rose 6.2 million barrels in the week ended Feb. 24, according to market sources citing figures from the American Petroleum Institute (API) on Tuesday. However, gasoline stocks decreased by 1.8 million barrels, and distillates, including diesel and jet fuel, decreased by 340,000 barrels.
Official EIA data on oil stocks from the US government will be released today.
This data is expected to increase for the 10th week in a row, with some analysts expecting an increase of about half a million barrels last week.
Other signs of increased supply were seen in data from the Organization of the Petroleum Exporting Countries (OPEC). OPEC production rose in February as Nigeria’s production condition recovered further.
According to a survey, OPEC produced 28.97 million barrels per day (bpd) in February, up 150,000 barrels per day from January. Production is still down by more than 700,000 barrels per day from September.
