Oil prices traded higher on Friday, boosted by positive economic data from China and lower-than-expected U.S. inflation. By 08:45 ET (12:45 GMT), U.S. crude futures traded 0.5% higher at $74.75 a barrel, while the Brent contract rose 0.1% to $78.69 a barrel, with both benchmarks trading close to two-week highs.
China’s strong economic recovery
The rise in oil prices was driven by China’s strong economic recovery. The country’s manufacturing sector continued to expand in March, with the Purchasing Managers’ Index (PMI) rising to 51.9 from 50.6 in February. The data indicates that China’s economy is gradually recovering from the pandemic-induced slump, which has increased the demand for oil.
The Chinese government’s aggressive stimulus measures have also helped the country’s economy to recover. In recent months, Beijing has implemented a series of measures, including tax cuts, infrastructure spending, and subsidies, to boost domestic demand and support economic growth.
US inflation data
The slight rise in oil prices was also due to lower-than-anticipated U.S. inflation data. The data indicated that U.S. consumer prices increased 0.2% in February, below economists’ expectations of a 0.4% rise. The lower-than-expected inflation data suggests that the Federal Reserve may not raise interest rates sooner than anticipated, which has increased investors’ confidence and pushed up oil prices.
Oil supply concerns
Apart from the positive economic data from China and lower-than-expected U.S. inflation, oil prices were also affected by supply concerns. The ongoing OPEC+ production cuts and the Saudi Arabia-led coalition’s decision to extend the voluntary production cuts have supported oil prices in recent weeks.
Moreover, the ongoing conflict in Yemen has also raised concerns over the security of oil supplies in the Middle East. The Houthi rebels in Yemen recently launched a drone attack on Saudi Arabia’s Ras Tanura oil refinery, one of the world’s largest oil processing facilities, which has increased concerns over supply disruptions.
In conclusion, oil prices rose to a two-week high on Friday, driven by positive economic data from China, lower-than-anticipated U.S. inflation, and ongoing supply concerns. The rise in oil prices is a welcome development for oil-producing countries, which have been hit hard by the pandemic-induced slump in demand. However, it remains to be seen how the global economy will recover from the pandemic and how this will affect oil demand in the long run.