On Wednesday, oil prices increased for a second day as expectations for global fuel consumption were raised by news of rising manufacturing activity in China, the largest consumer of crude. May Brent crude oil was up 24 cents, or 0.3%, to 83.69 per barrel. The April contract reached its expiration on Tuesday at $83.89, up $1.44 or 1.8%. After increasing 1.8% in the previous session, U.S. West Texas Intermediate (WTI) crude for April increased 31 cents, or 0.3%, to $77.36 per barrel.
Expectations for a significant increase in demand in China, the world’s second-largest consumer of crude oil, continue to support oil prices. According to statistics from the purchasing manager’s index (PMI) released by Caixin/S&P Global on Wednesday, manufacturing activity in China increased in February for the first time in seven months. On Wednesday, official government PMI numbers were also released, showing that February saw the manufacturing sector’s highest expansion since 2012.
The world’s largest consumer and producer of oil, the United States, however, showed signs of increasing crude stocks, which negated the strong demand signal. American Petroleum Institute (API) numbers released on Tuesday indicated that U.S. oil stocks increased by 6.2 million barrels in the week ending February 24. [API/S]. But, according to the API statistics, gasoline stockpiles fell by 1.8 million barrels, and distillate fuels, such as jet fuel and diesel, fell by 340,000 barrels.
Later on Wednesday, the official U.S. government stockpile data is expected. The report is predicted to indicate a 10th straight week of building, with analysts in a Reuters poll estimating that a rise of about half a million barrels happened last week. Additional signals of growing supply were apparent from data on the Organization of the Petroleum Exporting Countries (OPEC).