Investing.com — Oil prices edged higher Monday, benefiting from stronger-than-expected Chinese manufacturing activity data, pointing to a recovery in the world’s second-largest economy and top crude importer.
At 2:30 PM ET (18:30 GMT), Brent crude futures rose 2% to $86.41 per barrel, and U.S. West Texas Intermediate crude futures rose 2.3% to $83,387 per barrel to settle.
Both contracts posted huge gains in June as geopolitical turmoil in the Middle East and Russia heightened concerns about potential supply disruptions, prompting traders to place a bigger risk premium on crude.
Oil benefits from China’s manufacturing power
This positive tone continued on Monday after Chinese manufacturing activity grew more than expected in June, private purchasing managers’ index data showed on Monday.
Interest rates rose by 51.8 in June, compared to expectations for a reading of 51.5 and 51.7 the month before.
These figures overshadow data released on Sunday showing China’s manufacturing sector contracted for the second straight month in June. A reading below 50 indicates shrinkage.
Also helping tone was a decline in the , which continued from Friday after – which is the Fed’s preferred inflation gauge – showed inflation easing slightly in May.
The outcome led to some optimism that US inflation was cooling, and saw traders increase their bets on a 25 basis point rate cut in September, weighing on the dollar.
A softer dollar will benefit oil demand by making the commodity cheaper for international buyers.
Looked up new US inventory data
The strong start to the week for oil prices comes just days ahead of the weekly petroleum report due Wednesday.
Traders are looking for new signs that summer demand is putting a dent in crude inventories amid a surge in refinery activity.
Hurricane season in America
Traders are also looking at the impact hurricanes have on oil and gas production and consumption in America.
The Atlantic hurricane season started on Sunday with Hurricane Beryl, with a warning in effect in Barbados, St. Lucia, St. Vincent and the Grenadines and Tobago.
On Friday, the Energy Information Administration said oil production and demand for key products rose to the highest level in four months in April, but a major hurricane in the key Gulf of Mexico production region could impact this.
(Peter Nurse, Ambar Warrick contributed to this article.)
