Oil Prices Stable Amid China’s Suite of Economic Readings

Oil prices were steady on Monday as traders assessed a series of economic data from China, following early reading of US consumer sentiment showing weakness.

Brent crude oil futures expiring in August remained above $82.00, trading 0.31% lower at $82.36 per barrel, while the US West Texas Intermediate (WTI) crude futures stayed close to $78.00 per barrel, dropping 0.35% to $77.78 per barrel.

The two benchmarks posted losses on Friday after the University of Michigan consumer sentiment index slipped to 65.6 in June from May’s 69.1.

The preliminary data was the lowest in seven months and marked the third straight month of consumer confidence in the world’s largest economy slipping as households’ willingness to spend ebbed due to sticky inflation.

Still, the possibility of higher fuel demand helped Brent and WTI futures rise by almost 4% in the previous week to post their highest weekly percentage surge since April.

Oil markets in Singapore and other countries in the region were closed on Monday in observance of Eid al-Adha.

China Monday Economic Reports to Define Commodity Market

Traders are now watching China’s economic readings, which analysts expect to determine the behavior of the commodity markets this week.

The data released on Monday kicked off with the country’s industrial output slowing to 5.6% year-over-year (YoY) in May from 6.7% in April, missing forecasts of a 6.2% YoY growth.

Retail sales, on the other hand, climbed to 3.7% YoY last month from April’s reading of 2.3%. The figure was better than the 3.0% increase economists estimated as households practiced cautious spending despite Beijing’s stimulus measures.

Traders are seeking signs of the top crude importer’s current economic performance from its industrial production, retail sales, business investment, and house prices reports. Producer and consumer inflation data published the week prior have shown that China continues to face deflation.

The producer price index (PPI) dropped 1.4% YoY in May from the 2.5% fall the month earlier. The consumer price index (CPI) grew 0.3% YoY last month, unchanged from April but lower than the 0.4% rise projected.

The country’s refinery output data is also expected to provide cues on oil demand. Market spectators see China’s crude throughput, excluding a pandemic-driven decline in 2022, flat or falling this year for the first time in 20 years.

Last year, recovering oil demand saw the country process an all-time high of 14.8 million barrels per day (bpd).

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