Investing.com– Oil prices rose in Asian trade on Thursday tracking a weak dollar and signs of improving U.S. fuel demand, although softer-than-expected Chinese inflation data limited major gains.
The slid in overnight trade as data showed continued to decline through April, spurring bets on an in the Federal Reserve’s rate hike cycle.
A weaker dollar makes crude more attractive for international buyers, sprucing up demand.
rose 0.4% to $76.69 a barrel, while traded 0.4% higher at $72.81 a barrel by 22:07 ET (02:07 GMT).
A sharp drop in U.S. and inventories also showed that fuel demand was heating up ahead of the consumption-heavy summer season, which could benefit crude prices and tighten markets in the coming months.
The summer season brings the threat of wildfires in North America, which analysts opined could disrupt supplies from Canada. This, coupled with increasing fuel demand in the U.S., points to tighter supply conditions.
But gains in oil prices were limited following weaker-than-expected Chinese economic signals. Chinese inflation barely grew in April, while inflation shrank to 2020-lows as an economic rebound in the country sputtered.
Data earlier this week that showed that oil shipments to the world’s largest crude importer shrank in April, signaling that demand in China remained weak. A swathe of weak Chinese economic readings in recent months saw traders question whether an economic recovery in the country will drive oil demand to record highs this year.
An overall rise in , coupled with scant signals from the government that it plans to refill its Strategic Petroleum Reserve, also left oil prices with little support.
Oil prices are trading about 10% lower for the year on concerns that worsening economic conditions will erode demand this year.
Markets were also rattled by fears of a U.S. banking crisis following the collapse of several banks in the past two months, although regulatory intervention appeared to have soothed said fears.
Focus is now on a from the Organization of Petroleum Exporting Countries, due later in the day, for more cues on the demand outlook for the year.
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