Crude edged higher on Thursday, tracking dollar weakness, as the market struggled to find any clear direction but took some comfort in the World Bank’s tempered yet positive outlook on Chinese economic growth.
The World Bank said that China’s fiscal stimulus package would help its economy to grow faster than expected this year – raising its year-on-year gross domestic product growth forecast for China to 7.2 per cent for 2009 – but warned against assumptions that a recovery was in full swing.
Elsewhere, after Wednesday’s mixed US Department of Energy figures showing a decline in crude stocks but an unexpected rise in gasoline inventories, Chinese customs data showed diesel exports from the world’s third-largest economy fell in May to meet domestic demand.
May diesel exports fell to 390,000 tonnes, down from 510,000 tonnes in April. Both diesel and gasoline exports however were up on the year as refineries raised output to record levels in response to rising domestic sales. May gasoline exports hit 310,000 tonnes – double the rate a year before.
“We continue to expect fundamentals to improve in the third quarter of 2009,” said Jeffrey Currie, Goldman Sachs’ head of energy research who has recently said he sees oil hitting $95 a barrel by late 2010.
“Recent data points have already begun to suggest some stabilization. In particular, US implied oil demand has increased sharply off its recent bottom. Although demand remains at very low levels, the degree of weakness remains roughly consistent with the recent macro data. This suggests that as macro data improves, demand for oil will likely also rise.”
The dollar’s slight losses against its competitors increased the attractiveness of dollar-denominated commodities, such as crude, for investors operating in different commodities.
Nymex July West Texas Intermediate oil rose 34 cents to $71.37, while the August contract rose 32 cents to $72.04. ICE August Brent gained 33 cents at $71.16.