OIL PRICES DROP DESPITE POSITIVE ECONOMIC DATA FROM CHINA – 12 MAY 2023

Oil Spikes After US Signals June SPR Refill Could Start

Oil prices spiked after more Chinese statistics, this time in the form of money indicators, showed that the country’s economic openness from COVID has been disappointing. The most recent OPEC monthly report, which featured a small improvement in Chinese oil demand, is being somewhat shrugged off by energy speculators. China’s demand is now anticipated to increase from 760,000 bpd last month to 800,000 bpd.

Oil prices will eventually be more affected by the debt ceiling saga, but for the moment, any decline in prices seems to be quite small. Oil appears to be preparing to consolidate right now. Since a lot of the negative news has already been factored in, further monthly lows seem improbable.

After Energy Secretary Granholm hinted that oil purchases for the SPR might start in June, oil prices started to recover. Everyone anticipated that the US would need to start making purchases before the year was over, but the June deadline seems a little early. It makes perfect sense for the US to fill up well before winter when oil prices are close to the targets the Biden administration was aiming.