SINGAPORE: Oil prices rose on Wednesday, boosted by expectations of firm summer demand in the world’s two largest consumers, the US and China, though gains were capped by analysts’ caution about the wider economy.
Prices have seesawed in a tight range as signs of steady demand from an increase in travel during the Northern Hemisphere summer have competed with concerns that US tariffs on trading partners will slow economic growth and fuel consumption.
Brent crude futures rose 36 cents, or 0.5 percent, to $69.07 a barrel by 8:46 a.m. Saudi time. US West Texas Intermediate crude futures were up 47 cents, or 0.9 percent, to $66.99.
That reversed two days of declines as the market downplayed the potential for supply disruptions after US President Donald Trump threatened tariffs on purchases of Russian oil.
Major oil producers are pointing to signs of better economic growth in the second half of the year while data from China showed consistent growth.
“Strong seasonal demand is currently providing upward momentum to oil prices, as summer travel and industrial activity peak,” LSEG analysts said in a note.
“Increased gasoline consumption, especially in the US during the Fourth of July holiday period, has signalled robust fuel demand, helping offset bearish pressures from rising inventories and tariff concerns.”
China data showed growth slowed in the second quarter, but less than feared, in part because of frontloading to beat US tariffs. That eased some concerns about the economy of the world’s largest importer of crude.
The data also showed that China’s crude oil throughput in June jumped 8.5 percent from a year earlier, indicating stronger fuel demand.
However, some analysts saw the price rebound as temporary.
Much of the steadying of crude markets after two volatile sessions resulted from a mild technical correction rather than any significant shift in underlying fundamentals, said Phillip Nova’s senior market analyst Priyanka Sachdeva.
“Investors should monitor inflation and interest rate expectations in the United States as Trump’s continued push for broader tariffs could be inflationary and could dampen fuel demand in the medium term,” she said.
OPEC’s narrative remained more optimistic, Sachdeva said, pointing to the grouping’s monthly report on Tuesday that forecast that the global economy would do better in the year’s second half, boosting the oil demand outlook.
Brazil, China and India are exceeding expectations while the US and EU are recovering from last year, it added.
“The technicals may offer short-term relief, but fundamentally, the market lacks momentum,” Sachdeva said.
“Until clarity emerges on global growth, policy direction, and real demand recovery, especially from Asia, the crude complex looks set to drift sideways.”
