Oil prices spike as Chinese demand snaps back

Despite coronavirus demand dip, cheap oil ‘isn’t here to last’: OPIS analyst

OPIS energy analyst Tom Kloza argues oil prices will recover next year.

Oil prices surged Thursday after Chinese data showed a rebound in crude imports.

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Beijing imported 42.82 million tons of crude oil in April, or the equivalent of 10.42 million barrels per day, according to Reuters calculations based on government data. That represented a 7.64 percent increase from March, but was below the 10.64 million barrels from April 2019.

West Texas Intermediate crude oil, the U.S. benchmark, climbed 9.8 percent to $26.34 per barrel while Brent crude, the international standard was up 6.29 percent at $31.59.

CORONAVIRUS REOPENING PLAN DEALS LAS VEGAS CASINOS A LOSING HAND

Crude prices snapped their five-day winning streak on Wednesday as U.S. inventories swelled for a 15th consecutive week. Stockpiles rose by 4.6 million barrels in the week ended May 1, according to the Energy Information Administration, less than the 7.76 million that analysts surveyed by Refinitiv were expecting.

The winning streak, which came as states started easing “stay-at-home” orders and as the world’s largest producers began implementing output cuts, ignited a 115 percent increase in WTI prices and a 36 percent jump in Brent prices.

OIL PRICES RALLY AS MORE STATES REOPEN ECONOMIES

Oil traders will get a glimpse into the health of the U.S. economy on Friday when the April jobs report is released. More than 32 million people have filed for first-time unemployment benefits over the past six weeks.

Higher unemployment means fewer workers commuting and weaker demand for oil and byproducts like gasoline and jet fuel.

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“My bet is we'll see much higher prices by the end of the year,” Tom Kloza, OPIS chief oil analyst, told FOX Business’ Maria Bartiromo on Thursday. “The question is what happens in the next 40 days. There's a lot of oil on the water and it's pressuring prices to some extent.”

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