By Barani Krishnan
President Donald Trump might very be disappointed with China these days, but it was Chinese data on Friday that helped accelerate U.S. crude oil’s run toward $30 per barrel.
West Texas Intermediate, the New York-traded benchmark for U.S. crude, was up $1.63, or nearly 6%, to $29.19 per barrel by 12:40 PM ET (16:40 GMT), after data showed China's industrial production rose 3.9% in April from a year ago, improving from a 1.1% fall in March.
Brent, the London-traded global benchmark for oil, rose $1.03, or 3.2%, to $32.16.
WTI has been on a tear since hitting a bottom of $12.34 on Aug. 28, rallying 135% in just over two weeks. The U.S. crude benchmark remains down 50% on the year. But Friday’s two-month high of $29.55 in WTI brought its discount versus Brent, typically at $5 per barrel, to less than $3, powerfully altering the dynamics between the two benchmarks.
Much of WTI’s boom has been due to cratering U.S. production as the coronavirus pandemic shut down wells and oil rigs across the United States at a faster rate than elsewhere in the world.
Rising gasoline consumption has also helped as most of the 50 U.S. states have reopened from lockdowns imposed over the Covid-19.
But Friday’s run toward $30 WTI — an important psychological mark for oil bulls —- came on the back of China’s resurgent industrial production data underscoring a recovery in factory activity in the world’s largest oil importing country.
It also comes a day after President Donald Trump said he was very disappointed with China's failure to contain the outbreak of the virus, and that he might even cut ties with the world's second largest economy.
“WTI crude neared a two-month high as China’s industrial output rose for the first time since the coronavirus pandemic, fueling hope that crude demand will soon improve in Europe and then the U.S.” said Ed Moya, analyst at New York’s OANDA. “China remains the template for the economic recovery for the rest of the world and (it) gave energy traders some hope that demand will begin to recover over the coming weeks.”
The march toward $30 WTI will mark a personal victory for Trump, who lobbied OPEC, Russia and other world oil producers in April to slash production and has gotten behind the U.S. energy industry to ensure its survival amid the pandemic.
