London — Crude oil futures were broadly flat during most of the European trading morning Tuesday, although they have started an upward swing despite potential bearish fundamental changes on the horizon, including a lowered Chinese economic outlook for 2019.
At 1215 GMT, ICE May Brent crude futures were up 11 cents/b from Monday’s settle at $65.78/b, while the NYMEX April light sweet crude contract moved 14 cents/b higher to $56.73/b.
The market had initially dropped lower during Asian trading hours, which analysts said was due to indicators of weaker growth in China for 2019, alongside the restart of Libya’s El Sharara field, which has been under force majeure since December.
“I think the presumed resumption by Libya’s NOC of El Sharara is perhaps one reason why oil is under pressure, but more broadly — it’s China revising down its targets, which is on a macro scale is more important [to commodity markets] at this point,” said Harry Tchilinguirian, chief commodity strategist at BNP Paribas.
According to media reports, Chinese Premier Li Keqiang said Tuesday in his annual report that the target expansion for the country’s gross domestic product for 2019 was set at a range of 6-6.25%, as compared with last year’s target of 6.5%. China’s growth in 2018 was the smallest annual growth for the country since 1990.
Having a more near-term impact, Libya’s NOC lifted force majeure on operations at the Sharara field after almost three months following the removal of an armed group that had occupied the site, the state-owned company said late Monday.
“It’s [300,000 b/d output from Sharara] of light sweet oil, and so light sweet benchmarks will be affected — but on a more macro level, the market is in a subdued mood – building on the revisions down for Chinese growth, alongside talks that US-China trade negotiations have been difficult – if anything, the market is holding up really well,” said Tchilinguirian.
The market will also be looking to the upcoming weekly data releases around US crude and products stocks.
According to analysts surveyed by S&P Global Platts on Monday, US crude stocks for the week ended March 1 were up 1.9 million barrels to around 447.75 million barrels.
Preliminary reports on last week’s US inventory data will be released by the American Petroleum Institute later Tuesday and the more definitive numbers from the US Energy Information Administration later Wednesday.
As of 1215 GMT, the US Dollar Index was up 0.06% at 96.70.
— Gillian Carr, [email protected]
— Edited by James Leech, [email protected]
Source: S&P Global Platts
