Oil prices surged Wednesday afternoon in New York trading on the back of economic data that came in from China, monitored reports show. Prices had been pressured in the last few days on a bleak outlook on the overall global economy which combined with trade war worries.
West Texas Intermediate crude was trading up 4.21 percent for a gain of $2.27 on the day, at $56.21 per barrel. Brent crude was trading at $60.68, up 4.15 percent for a gain of $2.42 per barrel.
The reason for the spike in oil prices was favourable economic data that came in from a private survey of China’s services sector, which showed that in August, it grew at the fastest rate in three months, which triggered a flurry of hiring activity to support it—the biggest increase in hiring in the sector in over a year.
China, a major consumer of crude oil, imported 10.64 million barrels per day (mbpd) in April—a new record for China. And its H1 imports of crude represented an 8.8 percent rise year over year, or 800,000 bpd.
The growth here accounts for almost all of the world’s demand growth for the year, so it makes sense that all eyes are on China’s economic data as well as the trade war with the United States.
China’s August imports by its oil majors PetroChina and Sinopec increased 2.03 percent over July imports, which is larger than the increase seen in July of 1.25 percent. It is largely expected that the two oil majors will process even more crude oil this month, as refinery maintenance slows.
Oil prices are expected to react later today as well on API’s estimate on US crude oil inventories, and again tomorrow on EIA’s take on the inventory moves.