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Oil prices bounce on China stock rebound, strong economic data
[SINGAPORE] Crude oil prices bounced on Thursday on strong economic data from Japan and Germany, and as Chinese stocks picked up after the government launched new steps to halt a rout in its share markets.
Front-month US crude futures were up 84 cents at US$52.49 per barrel at 0652 GMT, but remain almost 7.5 per cent lower than the end of last week.
Brent crude was 9 cents higher at US$57.72 a barrel, though still 4 per cent below last Friday.
Chinese stocks rallied on Thursday after the securities regulator banned shareholders with large stakes in listed firms from selling, in Beijing's most drastic step yet to stem a sell-off that has roiled global financial markets.
The police are also investigating clues pointing to potentially "malicious" short-selling of Chinese shares, state news agency Xinhua said on Thursday. "There's some sense that stabilization might start to take place," said Herald Van Der Linde, head of Asia equity strategy at HSBC.
Demand for oil was also supported by the return from maintenance of a 120,000-barrels per day crude distillation unit in Japan, where machinery orders hit a 7-year high in May.
German exports rose at their fastest pace this year in May, boosting expectations that Europe's largest economy will pull off stronger growth in the second quarter after expanding modestly in the first.
But analysts said the oil market remained under pressure and that big gains were unlikely. "Oil is being pressured on multiple fronts, and China's equity wobble, the prospect of Iran's re-entry to the market and low liquidity all add up to an extremely fraught environment. Oil needs to establish a new range and we would see the WTI crude low around US$50 with the upside capped at US$58," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
A surprise increase in US stockpiles despite the peak demand American summer driving season added to global oversupply as the Organization of the Petroleum Exporting Countries (OPEC) and Russia produce at near record levels.
Iranian exports could also increase strongly if major global powers and Iran find a compromise in nuclear talks this week that could lead to a lifting of western sanctions against Tehran.