Brent Heads Toward $108 On Disappointing Data
Brent crude lost more ground after Chinese data added to growing worry that global supply increases were set to outpace demand.
The commodity traded at $108.04 at 5:52 GMT on Thursday morning as investors looked ahead to US jobs data for a better picture of the number one oil consuming nation’s economic growth.
Reuters reported that China’s April Purchasing Managers’ Index increased to 50.4 in April from 50.3 in March. Though the figure remained above the 50 point mark which denotes expansion, it came in below expectations with only a modest improvement from the previous month. The figure has raised questions about China’s ability to bounce back after slowing down in the first quarter.
On Wednesday, the US Federal Reserve confirmed that it would continue to taper its asset purchases by $10 billion per month. The bank’s announcement had little effect on the markets as investors instead focused on economic data from the nation.
US GDP for the first quarter was disappointing and showed that the nation grew just 0.1 percent, far below even the most pessimistic forecast.
The feeble growth has been attributed to the nation’s severe winter, leaving investors to scour economic data to determine whether or not the second quarter will show improvement. Most are focused on jobs data due out on Thursday and Friday, which will shed some light on the nation’s current state.
Also weighing on Brent prices was a massive drop in WTI after the Energy Information Administration confirmed that US inventories were at their highest level since records began in 1982.
The report showed that crude stocks increased by 1.7 million barrels last week, which indicates that the increases in domestic crude are not being properly accommodated.
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