Oil edged up on Thursday, supported by a drawdown in U.S. crude inventories although weak China data and concerns about excess oil supply capped price gains. Crude futures rose overnight after government data showed U.S. crude stocks last week fell for a third straight week, but dipped in early Asian trade on Thursday following weak China data.
China’s manufacturing sector contracted for a third straight month in May, hitting the lowest in 13 months, prompting talk of more stimulus, despite earlier reassurance from Chinese Premier Li that the world’s second largest economy can meet its 7 percent growth target this year. “So far the magnitude of easing was not strong enough to reverse the trend of economic slowdown,” HSBC’s greater China economist Julia Wang said in a note.
“More decisive actions are needed in the coming weeks to kick-start a recovery.” The weak data dragged on prices, analysts from Singapore’s Phillips Futures said in a note, adding that investors will be looking ahead to more data from the U.S. and the eurozone for price direction.