Oil steadied as concerns over China’s economic rebound offset bullishness around a US plan to start refilling its depleted strategic reserves.
West Texas Intermediate traded near $71 a barrel after closing 1.5% higher on Monday. China’s consumer spending and industrial activity grew at a slower pace than expected in April, adding to signs that the rebound post-Covid Zero is losing momentum. Crude processing held near a record, however.
“The key question though is what the market will focus on: the weaker-than-expected overall numbers or the strong oil data?” said Warren Patterson, head of commodities strategy for ING Groep NV. “You would think the latter, however, the oil market has been largely macro-driven in recent weeks.”
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Oil is 11% lower this year as China’s lackluster recovery and a potential US recession weigh on the demand outlook. Ongoing talks on the US debt limit are also unnerving markets, with Treasury Secretary Janet Yellen saying the nation is already paying a price for not yet increasing the ceiling.
The US solicited bids for as much as 3 million barrels of sour crude for its Strategic Petroleum Reserve, with deliveries planned for August and awards to be announced in June, the Energy Department said. The agency released more than 200 million barrels last year, in part to curb higher prices.
A resurgence of wildfires in Alberta prompted drillers to suspend some output, as officials warned of worsening conditions ahead. In 2016, blazes tore through the Canadian province and shut more than 1 million barrels of production.
The International Energy Agency is scheduled to release its monthly report later Tuesday, providing the market with a snapshot on the demand and supply outlook. Industry data on US inventories is also expected.
