Investing.com -- Oil prices climbed higher Thursday, bouncing after the previous session’s plunge, helped by substantial demand from Chinese refineries as well as more stimulus from the country’s central bank.
By 09:00 ET (13:00 GMT), U.S. crude futures traded 1% higher at $68.92 a barrel, while the Brent contract rose 1% to $73.91 a barrel.
Data released earlier Thursday showed that China’s oil refinery throughput in May rose 15.4% from a year earlier, hitting its second highest total on record, indicating healthy demand from the country’s refineries for crude.
Helping the tone was the news that China’s central bank lowered its one-year loan rate by 10 basis points, the first reduction since August, suggesting that Beijing is determined to support the country’s stuttering recovery.
The Chinese economy is the second largest in the world and is the largest importer of crude but is struggling to bounce back from its COVID hit. Data released earlier Thursday showed that industrial output grew 3.5% in May from a year earlier, slower than the 5.6% expansion in April.
This prompted JPMorgan to cut its forecast for China’s economic growth to 5.5% this year against an earlier estimate of 5.9%.
Yet, despite the gains this session, both crude benchmarks are on course to post weekly losses of around 3% having fallen around 1.5% in the last session.
This follows persistent concerns over the demand outlook in the U.S. and China, in particular.
The U.S. Federal Reserve paused its year-long rate-hiking cycle on Wednesday, as widely expected, but signaled the distinct possibility of two more rate increases this year as it continues to combat elevated consumer prices.
This aggressive pace of monetary tightening has raised fears that the U.S. economy, the largest consumer of oil in the world, will fall into recession in the second half of the year.
U.S. crude stockpiles rose by 7.9 million barrels last week, while gasoline and distillates inventories also expanded, according to data from the Energy Information Administration. That’s a bearish signal of falling demand, given the U.S. summer driving season is underway.
In Europe, another major source of crude demand, the European Central Bank raised interest rates for the eighth successive time on Thursday and signaled further policy tightening, as it battles high inflation.
The eurozone’s economy entered recession in the first quarter of the year, and growth is going to be hard to find in subsequent quarters given the ECB has now increased borrowing costs by a combined 4 percentage points in a year, its fastest pace on record.