Oil prices settle on demand hopes ahead of US fresh inventory data

Investing.com– Oil prices settled higher Monday, benefiting from stronger-than-expected Chinese manufacturing activity data, suggesting a recovery in the world’s second-largest economy and major crude importer. 

At 14:30 ET (18:30 GMT), Brent crude futures rose 2% to $86.41 a barrel, and U.S. West Texas Intermediate crude futures climbed 2.3% to settle $83.387 a barrel.

Both contracts were sitting on bumper gains through June as geopolitical ructions in the Middle East and Russia pushed up concerns over potential disruptions in supply, which saw traders attach a greater risk premium to crude. 

Oil benefits from Chinese manufacturing strength 

This positive tone was extended Monday after Chinese manufacturing activity grew more than expected in June, private purchasing managers index data showed on Monday. 

The Caixin Manufacturing PMI rose 51.8 in June, compared to expectations for a reading of 51.5, and the prior month’s reading of 51.7. 

The reading has overshadowed government PMI data released on Sunday, which showed China’s manufacturing sector shrank for a second consecutive month in June. A reading below 50 indicates contraction. 

Also helping the tone was a fall in the dollar index, extending declines from Friday after PCE price index– which is the Fed’s preferred inflation gauge- showed inflation eased mildly in May.

The reading spurred some optimism that U.S. inflation was cooling, and saw traders ramp up bets on a 25 basis point rate cut in September, which weighed on the greenback.

A softer dollar benefits oil demand by making the commodity cheaper for international buyers. 

Fresh U.S. inventory data eyed

The strong start to the week for oil prices come just days ahead of the weekly petroleum report due Wednesday.

Traders are looking for fresh signs of that summer demand is making a dent in crude inventories amid a pick in refinery activity.   

Hurricane season in Americas 

Traders are also watching for the impact hurricanes have on oil and gas production and consumption in the Americas.

The Atlantic hurricane season started with Hurricane Beryl on Sunday, with a warning is in effect in Barbados, St Lucia, St Vincent and the Grenadines and Tobago.

On Friday the Energy Information Administration reported that oil production and demand for major products rose to a four-month high in April, but a severe hurricane in the important Gulf of Mexico producing region could impact this.

(Peter Nurse, Ambar Warrick contributed to this article.)

This post is originally published on INVESTING.

  • Related Posts

    Oil falls after Trump reverses Colombia sanctions threat

    By Anna Hirtenstein LONDON (Reuters) -Oil prices wavered on Monday after the U.S. and Colombia reached a deal on deportations, reducing immediate concern over oil supply disruptions but keeping traders…

    Dollar gains on tariffs fears; euro looks to ECB meeting

    Investing.com – The US dollar slipped lower Monday, rebounding after recent losses as attention returned to the potential for trade tariffs from the Trump administration at the start of a…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Capital.com Partners With LSEG to Scale Market Data Services

    • February 13, 2025
    Capital.com Partners With LSEG to Scale Market Data Services

    Pound Soars as US Tariff Threat Fades. Forecast as of 13.02.2025

    • February 13, 2025
    Pound Soars as US Tariff Threat Fades. Forecast as of 13.02.2025

    Exclusive: B2BROKER Extends cTrader Support as White Label Demand Increases

    • February 13, 2025
    Exclusive: B2BROKER Extends cTrader Support as White Label Demand Increases

    Exclusive: B2BROKER Extends cTrader Support as White Label Clients Surpasses 40

    • February 13, 2025
    Exclusive: B2BROKER Extends cTrader Support as White Label Clients Surpasses 40

    You Want to Trade at 3AM? Schwab Opens Round-the-Clock Trading Access for All Clients

    • February 13, 2025
    You Want to Trade at 3AM? Schwab Opens Round-the-Clock Trading Access for All Clients

    Webull Dares to Enter Prediction Markets Where Robinhood Failed

    • February 13, 2025
    Webull Dares to Enter Prediction Markets Where Robinhood Failed