Oil rises on manufacturing data, U.S. inventories
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[July 01, 2020] By
Bozorgmehr Sharafedin
LONDON (Reuters) - Oil prices rose on
Wednesday on a string of positive manufacturing data and a drawdown in
U.S. crude inventories, both indicating an economic recovery and rise in
energy demand despite surging coronavirus infections around the world.
Brent crude <LCOc1> was up 59 cents, or 1.4%, to $41.86 a barrel at 1107
GMT, and U.S. crude was up 64 cents, or 1.6%, at $39.91 a barrel.
U.S. crude and gasoline stocks fell more than expected last week, while
distillate inventories rose, data released by the American Petroleum
Institute (API) late on Tuesday showed. [API/S]
"The market’s main concern is demand and how COVID-19 affects it, so any
hint that demand is recovering is welcomed with a price boost," said
Rystad Energy analyst Louise Dickson.
Official inventory data from the U.S. Energy Information Administration
(EIA) is due out later on Wednesday.
Sentiment was also boosted by improving economic data around the world.
In China, the manufacturing purchasing managers' index (PMI) showed
factories slowly gathered steam in June after the government eased
lockdowns.
Germany's manufacturing sector contracted at a slower pace in June,
while French factory activity rebounded into growth.
(Graphic: Brent and WTI price forecast since June 2019,
https://fingfx.thomsonreuters.com/
gfx/editorcharts/nmovajqkmpa/eikon.png)
A surge in new infections in the United States has worried some
investors, but most are betting this will not be enough to derail a
broader rebound in the global economy.
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The moon rises behind the storage tanks of a local oil refinery in
Omsk, Russia June 5, 2020. REUTERS/Alexey Malgavko
The U.S. PMI, due later on Wednesday, is forecast to show that activity in June
continued to recover from an 11-year low in April, while the non-farm payrolls
report on Thursday is expected to show the economy added 3 million jobs in June.
Also supporting prices was a drop in output from the Organization of the
Petroleum Exporting Countries and its allies, known as OPEC+, following an
agreement to curb supplies.
"Although there is still the danger of demand outages in view of increased new
cases of COVID-19, OPEC+ seems to have the market under control at the moment,"
said Commerzbank analyst Eugen Weinberg.
OPEC produced an average of 22.62 million barrels per day (bpd) in June, a
Reuters survey found, down 1.92 million bpd from May's revised figure.
Iraq's oil exports in June fell to 2.8 million bpd from 3.21 million bpd in May,
the oil ministry said.
Indian state-refiners' gasoline and gasoil sales rose in June compared with May,
continuing with a gradual recovery as the nation relaxed lockdown. (Graphic:
World’s top producers slash output,
https://fingfx.thomsonreuters.com/
gfx/ce/bdwpkaeyopm/world%20top%20prodcers.JPG)
(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Aaron
Sheldrick in Tokyo, editing by Mark Potter and Elaine Hardcastle)
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