Oil prices shake off losses after strong US economic data

Jessica Morris
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High Oil Prices Continue To Drive Gas Prices Steadily Upwards
Oil inventories worldwide remain stubbornly high (Source: Getty)

Oil prices crept into positive territory this morning, as official data pointed to solid demand in the world's largest economy.

The Commerce Department said retail sales growth accelerated in May. Meanwhile, a separate release showed inflation rose for the fourth consecutive month.

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This helped Brent crude, the global benchmark, swell 0.74 per cent to $47.72 per barrel this afternoon. Its US counterpart, West Texas Intermediate crude, increased 0.61 per cent to $45.96.

Crude shook off earlier anxieties about stubbornly high oil inventories in tankers and onshore storage facilities worldwide. Low oil prices have led to widespread production cuts, but this has been slow to eat into bloated oil stocks.

BNP Paribas analysts said they expect "very little implied global stock change will occur from third quarter 2016 until the end of 2017."

"As such, the inventory overhang built from the start of 2014 will remain largely in place, and thus continues to represent an impediment to any price rally."

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Hamza Khan, head of commodities strategy at ING Bank, warned the situation could worsen in the next two months.

"Inventories are high and we are in the withdrawal season. Things could get worse when we enter late August and September when inventories usually build," he said.

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