Oil prices extend gains on strong US data
Singapore: Crude extended gains in Asia today following a 10 per cent price surge in the previous session fuelled by strong US economic data.
US benchmark West Texas Intermediate (WTI) for October delivery rose 52 cents to USD 43.08 while Brent crude for October gained 23 cents to USD 47.79 in late-morning trade.
Both WTI and Brent today closed up 10.3 per cent, after hovering around six-and-a-half year lows all week on concerns about China’s faltering economy.
“We are seeing very strong volumes in Asian trading… there’s a bit of shock and disbelief at the strength of the US economic data,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.
The rally comes after the Commerce Department reported the US economy expanded at an annual rate of 3.7 per cent in the second quarter, sharply above the initial appraisal of a 2.3 per cent gain.
The more robust April-June growth mainly reflected higher investment, state and local government spending, and consumer spending than was reported in the initial estimate.
McCarthy said investors were also buoyed by strong data on US durable manufactured goods and crude inventories.
Durable goods orders in the world’s biggest economy and key global economic growth engine rose 2.0 per cent in July, boosted by automobiles, the US Commerce Department said.
The latest official stockpiles report released yesterday meanwhile showed a drawdown, indicating healthy demand.
Output however slipped only slightly, leaving production levels and overall crude inventories at record levels.
Nicholas Teo, market analyst at CMC Markets in Singapore, said “the fundamentals remained generally unchanged”.
“Elevated US crude inventories, higher OPEC production, and slowing global growth suggest that the supply glut may persist for the rest of the year,” Teo said.
“This means any rally in oil prices may be an opportunity to sell,” he added.