|News||Oil rebounds for one-month low after Chinese data|
|Analysis||Oil traded near the lowest in almost a month affected by the negative outlook for the US economy and global growth to then rebound in Asia this morning after the Chinese economic data which showed the industrial production slowed less than the expected, which eased the concerns about slowing growth.|
Oil opened today at $96.93 recording the intraday high at $97.76 and the low of $96.53 and is currently trading around $97.48. Crude was trading lower in early hours in Asia on the back of prevailing market jitters over growth and S&P’s downgrade to Greece credit rating to world’s lowest, citing rising likelihood for default, yet the Chinese data showed inflation in line with expectations and less than anticipated slowdown in industrial production which eased fears over slowing growth from continued monetary tightening to rein in inflation rates.
Crude price have been trending lower amid concerns about the strength of the global economic recovery and news that Saudi Arabia will increase supply levels in July. However, Chinese economic data which was issued today revealed some strength for the economy; as consumer prices cam in at 5.5% from 5.3% in April, and the industrial production showed a 13.3% increase in May while retail sales rose 16.9% on the year, marginally lower from April’s 17.1%.
The data is likely to fuel expectations for further monetary tightening in the coming days as authorities try to stem a flood of credit in the economy on the back of the rapid expansion, yet for now the focus remains on growth rather than rising inflation and monetary tightening, which accordingly support crude gains on growth and demand aspects.
Brent crude rose today to reach $119.10 per barrel, but Brent supplies are expected to tighten because of production problems in North Sea which is further support for Brent to remain to the upside.
More volatility is expected to prevail today with the U.S. data queued for release and continued focus on the debt crisis in the Euro area, where finance chiefs are expected to continue their meetings to arrange the final draft on the new Greek bailout.