The rate of inflation in the U.S. declined for the first time in 2.5 years. Against this background, expectations of a less aggressive interest rate hike by the Federal Reserve (Fed) began to rise. Also, there have been signs of sustainable growth in China’s demand for oil. Altogether, these factors had an impact on prices, which gained 4% over the past week.
Michael Tran, RBC commodity strategist, noted that China’s oil imports will gradually increase, as refinery capacity rises. In addition, oil stockpiling is still a strategic priority, and it has an influence on demand as well.
According to ANZ analysts, China's traffic congestion index increased by 31% compared to last week. This index includes data on 15 Chinese cities with the highest number of registered vehicles.
Oil prices were also supported by the dollar’s decline after the data release on U.S. lower inflation. Usually, a weaker dollar increases oil demand, as the energy source becomes cheaper to purchase in other currencies.