Oil prices rose on Monday as Chinese industrial output and retail data topped expectations, though gains were capped by overall figures showing the country’s slowest quarterly economic growth in decades.
The positive Chinese data may indicate early success in the government’s stimulus efforts and potentially more oil demand in the world’s second biggest economy. Brent crude futures LCOc1 rose 43 cents, or 0.64%, to $67.15 a barrel by 1335 GMT, while U.S. crude CLc1 was up 35 cents, or 0.58%, at $60.56 a barrel. Both contracts last week made their biggest weekly gains in three weeks on cuts in U.S. oil production and diplomatic tensions in the Middle East. Analysts at ANZ bank said China’s crude oil imports year-to-date still looked impressive, even as imports fell in June for a second straight month. China’s crude oil throughput rose to a record 13.07 million barrels per day in June, up 7.7% from a year earlier, following the start-up of two new large refineries, official data showed on Monday.
Still, economic growth of just 6.2% in the second quarter of 2019 – the weakest in 27 years – highlighted the impact of trade tensions with Washington and raised the possibility that more incentives might be needed to jump-start the economy. Despite a truce agreed between the Chinese and U.S. presidents last month, the trade war remains unresolved. The Paris-based International Energy Agency’s monthly report on Friday said abundant output and sluggish growth would leave oil markets increasingly over-supplied going into 2020. “The basic message is that the second half of this year will see some depletion in global oil inventories but this will be followed by a dismal 2020, especially the first six months of next year,” PVM analyst Tamas Varga said.
Refineries in the path of Tropical Storm Barry continued to operate, although the storm has slashed U.S. Gulf of Mexico crude output by 73%, or 1.38 million barrels per day. In the Middle East, Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran was ready to hold talks with the United States if Washington lifted sanctions and returned to the 2015 nuclear deal it quit last year. British Foreign Secretary Jeremy Hunt said on Monday there remained a “small window” of time to save the Iran nuclear deal as Tehran signaled it would ramp up its nuclear program.