Oil prices steady despite Turkey

Markets have dismissed worries of oil supply disruptions from the attempted coup in Turkey.

Crude prices were largely steady in early Asian trade Monday as investors focus their bets on favorable growth data reported by the US and China and dismissed worries of oil supply disruptions from the attempted coup in Turkey over the weekend.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $46.00 a barrel at 0231 GMT, up $0.05 in the Globex electronic session. September Brent crude on London’s ICE Futures exchange rose $0.20 to $47.81 a barrel.

Over the weekend, oil prices were boosted by data that showed China’s second quarter gross domestic product grew 6.7 per cent, higher than what analysts had expected. US retail sales and industrial production also rose strongly in June.

Moreover, concerns that the military coup in Turkey could hinder flow of oil through the Turkish straits, a crucial shipping and trading route, also helped buoy prices.

But prices dropped when it became clear that the Turkish ports were operating normally.

“Prices were softer because oil transport was not interrupted as the coup unfolded,” said Ric Spooner, chief analyst at the Australia-based CMC Markets, who expects prices to move sideways this week on lack of strong catalysts.

Another factor that weighed on oil prices is an increase in the number of active oil rigs digging for oil in the US On Friday, data from industry group Baker Hughes showed US rig count ticked up by six to 357, the highest number since April.

While the number of rigs remains low compared with two years ago, the recent increase suggests that producers are willing to invest in new production at current prices.

China’s growing inventories of refined fuels is also jolting some investors who expect the country’s oil demand to taper off in the coming months as domestic production of fuels, such as gasoline and diesel, outpaces demand.

Recent prolonged heavy rain and floods in southern China could further dampen demand for fuels, London-based research firm Energy Aspects said.

“Chinese gasoline demand will slow over the third quarter. The 350,000 barrels a day of year-on-year demand growth in third quarter last year was the highest year-on-year growth achieved over a quarter in at least the past decade, so will be difficult to repeat,” the research firm said.

China’s crude imports in June hit the lowest in five months to 7.5 million barrels a day. The firm expects China’s overall crude imports to average around 7.4 million a day in 2016, higher than 6.7 million barrels a day saw last year.

Nymex reformulated gasoline blendstock for August -- the benchmark gasoline contract -- rose 6 points to $1.4226 a gallon, while August diesel traded at $1.4050, 76 points higher.

ICE gasoil for August changed hands at $412.25 a metric ton, down $0.75 from Friday’s settlement.

- Dow Jones newswires