Singapore, March 1 (BNA): Oil prices extended gains for a second session on Wednesday after a strong jump in manufacturing in China, the world’s largest crude importer, boosted expectations of global fuel demand.
Brent crude futures for May were up 46 cents, 0.6 percent, at $83.91 a barrel at 04:45 GMT. U.S. West Texas Intermediate crude for April rose 42 cents, or 0.6%, to $77.47 a barrel, Reuters reported.
Oil prices continue to be supported by expectations of a strong recovery in demand in China, the world’s second largest consumer of crude.
“Another round of bullish surprise in China’s PMI provides further conviction for a stronger-than-expected recovery, supporting a more optimistic outlook for oil demand,” said Yeap Jun Rong, market strategist at IG.
“This provided a much-needed catalyst for oil prices to take some relief from the earlier sell-off on Monday, as China’s recovery shows it is on track to mitigate some of the weakness in global demand from hawkish central banks,” Yip added.
Data showed that factory activity in China rose for the first time in seven months in February, according to the Purchasing Manager’s Index (PMI) released by Caixin/S&P Global on Wednesday.
Official government PMI data released on Wednesday also showed that the fastest expansion in manufacturing since 2012 occurred in February.
However, the strong demand signal was offset by signs of rising crude stocks in the United States, the world’s largest oil consumer and producer.
US oil inventories rose by 6.2 million barrels in the week ending February 24, according to market sources citing American Petroleum Institute (API) figures on Tuesday.
However, gasoline stocks fell by 1.8 million barrels, and fuel derivatives, including diesel and jet fuel, fell by 340,000 barrels, according to data from the American Petroleum Institute.
Official US government data on inventories is due later on Wednesday.
It is expected that this data will show the tenth consecutive week of increase, as analysts predicted in a Reuters poll that an increase of about half a million barrels occurred last week.
Further signs of rising supplies are seen in data from the Organization of the Petroleum Exporting Countries (OPEC).
A Reuters survey found that OPEC pumped 28.97 million bpd in February, up 150,000 bpd from January. Production is still down by more than 700,000 bpd since September.