U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply higher on Wednesday in response to bullish news affecting both supply and demand. The news, which drove both futures contracts to 5-month highs, alleviated some of the concerns over rapidly rising U.S. supply and lower demand from China.
China GDP Report Provides Support
Crude oil futures are trading higher on tighter market fundamentals, which indicate strong demand from refineries in China, the world’s second-largest crude user.
On Wednesday, data from the National Bureau of Statistics showed China’s refinery throughput in March rose 3.2 percent from a year earlier to 53.04 million tonnes, or 12.49 million barrels per day (bpd).
Additionally, China also reported its economy grew 6.4 percent in the first quarter of 2019, beating analysts’ expectations. Traders were looking for 6.3 percent growth. The data indicates that growth is bottoming out, primarily due to government stimulus, which could lead to increased demand for crude oil.
American Petroleum Institute Data Supportive
Late Tuesday, the American Petroleum Institute (API) reported a draw in crude oil inventory of 3.096 million barrels for the week-ending April 12. This was bigger than the 1.711-million barrel build estimate.
Analysis of the API data shows that the net build for this year’s 16-week period is now 4.44 million barrels.
The API also reported a draw in gasoline inventories for the week-ending April 12 in the amount of 3.561 million barrels. Analysts estimated a draw in gasoline inventories of 2.133 million barrels for the week.
Distillate inventories increased by 2.33 million barrels, compared to an expected draw of 846,000 barrels for the week.
The early news is definitely supportive for higher prices on Wednesday. However, gains may be limited until the U.S. Energy Information Administration releases its weekly inventories report at 14:30 GMT. It is expected to show a drawdown of 1.2 million barrels. Prices could soar if the report shows a larger-than-expected drawdown.
June WTI crude oil will remain bullish as long as prices can hold above a key technical level at $63.48. June Brent crude oil is attempting to breakout over $71.77. If successful then this will also put the futures contract in a position to accelerate to the upside.
This article was originally posted on FX Empire
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