Oil prices rise on China stocks rebound, Greek deal hopes
Oil prices rose on Friday on hopes that the Greek debt crisis could be resolved and as Chinese stocks rebounded, but analysts said bigger jumps were unlikely as global crude production remained high.
Greece has tabled a cash-for-reforms proposal to creditors, raising hopes that a deal could be reached this weekend.
In China, the CSI300 .CSI300 stock index was up more than 5 percent by 0421 GMT, extending gains from the previous session after the government launched measures to halt a 30 percent fall in prices since June.
Despite this pick-up, analysts said that China’s economic growth was slowing.
“Underlying growth remained weak… and some of the commodities prices suggested activity growth likely underperformed in June,” Morgan Stanley said.
Chinese steel and iron ore prices SRBcv1 .IO62-CNI=SI hit record lows this week as demand in the world’s top producer wanes, and Morgan Stanley said that it expected further policy measures from Beijing to stabilise the economy.
Although China’s overall commodity demand is slowing, analysts said Chinese oil demand would remain strong as the world’s second-biggest oil consumer builds up inventories.
“Oil demand growth this year has been disconnected from the fundamental realities of China’s growth trajectory,” Michal Meidan of consultancy China Matters said in a report.
“The rapid increase in China’s apparent oil demand growth has been due first and foremost to stockpiling, while real demand has also been supported somewhat by low oil prices.”
Front-month U.S. crude futures CLc1 were trading at $53.27 per barrel at 0425 GMT, up 49 cents, although prices remain 6 percent below last Friday.
Front-month Brent crude LCOc1 was up 52 cents at $59.13 a barrel, 2 percent below the end of last week.
Beyond China and Greece, traders were also waiting to hear whether a compromise would be reached between world powers and Iran that could lead to increased oil flows if sanctions are lifted, although the U.S. government said overnight that it was in no rush to reach a deal.
Friday’s gains, however, were unlikely to extend much further, analysts said, as global supplies remained plentiful.
“We see it as quite likely… for Brent to range between $55 and $60 per barrel for the remainder of the year,” JBC Energy said in a report.
Top exporter Saudi Arabia continues to keep supply high, with sources saying it will maintain fully contracted volumes to most Asian buyers in August.
Source: Reuters – Oil prices rise on China stocks rebound, Greek deal hopes
