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Oil Prices Rise Amidst Focus on Chinese Trade Data

Oil prices edged higher in Asian trading on Thursday, with investors closely monitoring upcoming trade data from China for insights into demand from the world’s largest crude importer.

Ceasefire Hopes and U.S. Efforts in Focus

Attention also remained on the potential ceasefire between Israel and Hamas, particularly as the U.S. intensified efforts to broker an agreement. The Biden Administration’s decision to pause weapon shipments to Israel over its invasion of Rafah added to the anticipation.

Brent and WTI Futures Show Slight Increase

Brent oil futures expiring in July increased by 0.3% to $83.82 a barrel, while West Texas Intermediate (WTI) crude futures rose by 0.3% to $78.83 a barrel as of 20:38 ET (00:38 GMT).

Previous Data Shows Draw in Crude Inventories

Oil prices had experienced a slight uptick on Wednesday following data indicating a draw in overall crude inventories. However, a buildup in gasoline and distillate inventories offset this draw.

Dollar Strength Caps Major Gains

The strength of the dollar constrained significant gains in crude prices, as several Federal Reserve officials cautioned that interest rates would remain elevated for an extended period.

Awaiting Chinese Trade Data

The oil market’s focus now shifts to upcoming Chinese trade data scheduled for later in the day. This data is anticipated to offer deeper insights into the activities of the world’s largest oil importer, especially after it recorded its weakest trade balance in four months in March.

Concerns Over Chinese Economic Health

Particular attention will be paid to China’s oil import figures, which saw a slight uptick in the first quarter of 2024. Despite steady Chinese oil demand in recent months and some resilience in the economy, traders remain wary of potential weakness in the Chinese economy, which could dampen the country’s appetite for crude.

Macquarie Analysts’ Projections

Analysts at Macquarie anticipate Brent crude to dip below $80 in the coming months, citing “bearish fundamentals” and growing expectations of an Israel-Hamas ceasefire. They also point to increased production outside the Organization of Petroleum Exporting Countries and allies (OPEC+), which is expected to contribute to looser supplies. Additionally, the prospect of persistent inflation and prolonged high-interest rates may weigh on demand.

Potential Factors Affecting Oil Prices

However, the analysts suggest that any future interest rate cuts could potentially boost demand later in the year. They also highlight that an extension of ongoing production cuts by OPEC+ could provide relief to oil prices amidst these uncertain times.

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