© Reuters. FILE PHOTO: A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel
By Emily Chow
SINGAPORE (Reuters) -Oil prices inched up on Thursday, extending gains from the previous two sessions on signs of a strong economic rebound in China, the world’s top oil importer, though gains were capped by a rise in inventories and concerns over overall global demand.
futures rose 12 cents, or 0.1%, to $84.43 a barrel at 0445 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 9 cents, or 0.1%, at $77.78.
Both contracts rose about 1% in the previous session after data showed manufacturing activity in China in February grew at the fastest pace in more than a decade, adding to evidence of an economic rebound in the world’s second largest economy after the removal of strict COVID-19 curbs.
However, a tenth consecutive week of crude stock builds in the United States capped the market’s gains.
U.S. crude inventories rose by 1.2 million barrels in the week ending Feb. 24 to 480.2 million barrels, their highest level since May 2021, the Energy Information Administration reported.
Analysts polled by Reuters had expected a 500,000-barrel rise.
Record exports of U.S. crude oil, however, kept the build smaller than in recent weeks, with shipments rising to 5.6 million barrels per day (bpd) last week, according to the EIA.
Oil’s gains were also capped by looming uncertainty over the overall global demand outlook, keeping prices “largely unchanged,” said Serena Huang, head of APAC analysis at analytics firm Vortexa.
Expectations of rate hikes by the European Central Bank (ECB) are growing after inflation in Germany, Europe’s largest economy, rose more than expected in February, with food and energy prices increasing despite relief measures.
This comes after France and Spain, also key economies in Europe, posted unexpected gains in inflation.
In the U.S., manufacturing contracted for a fourth straight month in February, though there were signs that factory activity was starting to stabilize, with a measure of new orders pulling back from a more than 2-1/2-year low.
“German inflation raised worries that the ECB will have to be more aggressive with its tightening cycle. The U.S. data shows the economy is still slowing down but some parts are improving,” said Edward Moya, senior market analyst at OANDA, in a note.
“Oil looks like it will stay stuck in a trading range, but the risks are clearly to the upside. Some traders might be waiting until we get a better sense of what will be the peak rate after next Friday’s nonfarm payroll report.”
Meanwhile, crude oil processed by Indian refiners reached record levels in January, provisional government data on Wednesday showed, as the country boosted imports of Russian barrels that Western countries shunned.
Refinery throughput in the world’s third-largest oil importer and consumer reached 5.39 million barrels per day for January, the highest since Reuters records going back to 2009.