Investing.com– Oil prices moved little in early Asian trade on Thursday, steadying near a 10-day high as focus turned squarely to key Chinese economic data, although a weak dollar and signs of tighter supply presented a positive outlook for crude.
Crude prices were sitting on strong gains this week as a slew of softer-than-expected economic data pulled down the dollar, while the weekly U.S. inventory report showed a substantially bigger-than-expected draw ahead of the Labor Day weekend.
The prospect of more Chinese stimulus measures also somewhat aided markets, although investors were focused largely on key purchasing managers’ index (PMI) data from the country, due later on Thursday. Several more U.S. economic readings are also on tap.
rose 0.1% to $85.37 a barrel, while rose 0.1% to $81.78 a barrel by 20:20 ET (00:20 GMT). Both contracts were set to break a two-week losing streak, but were also set for a muted performance in August.
China PMIs on tap, rate cut speculation grows
Markets were awaiting PMI readings from the world’s largest oil importer to gauge whether business activity saw any improvement through August.
Analysts expect activity to have remained in contraction, while the is expected to have grown at a languid pace.
China has been a key point of contention for oil markets this year, as traders feared that worsening economic conditions in the country will dent its appetite for crude. This notion was exacerbated by July trade data showing a steep drop in Chinese oil imports, especially as fuel demand in the country remained weak.
To this end, markets are also awaiting any more stimulus measures from Beijing, with media reports suggesting that a potential cut in mortgage and deposit rates was imminent as the government moves to shore up a slowing post-COVID economic recovery.
U.S. inventories see massive weekly draw
Data from the Energy Information Administration showed on Wednesday that U.S. shrank by about 10.6 million barrels (mb) in the week to August 25, more than thrice as much as expectations for a 3.3 mb draw.
The draw came as refiners ramped up production before the Labor Day weekend, which usually signals peak U.S. summer demand. But fuel demand is also expected to likely fall off in the remainder of the year.
Still, the large draw, which was also driven in part by strong oil exports, signaled that U.S. supplies remained tight.
Markets were also watching for any more disruptions in production stemming from Hurricane Idalia, which made landfall in Florida this week.
Weak dollar aids prices, more U.S. data on tap
A softer dollar also aided oil prices this week, as the greenback consolidated from a near three-month high. A string of weak U.S. economic readings, particularly softer-than-expected and figures, spurred bets that the Federal Reserve will have limited headroom to keep raising interest rates.
Focus is now squarely on data, as well as , due this week.
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