Oil prices extend gains on strong US data

US benchmark West Texas Intermediate (WTI) for October delivery rose 66 cents to US$43.22 while Brent crude for October gained 64 cents to US$48.20 in afternoon trade. Both WTI and Brent closed up 10.3% late last week, after hovering around six-and-a-half year lows all week on concerns about China’s faltering economy. “We are seeing very strong volumes in Asian trading... there’s a bit of shock and disbelief at the strength of the US economic data,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP. The rally comes after the Commerce Department reported the US economy expanded at an annual rate of 3.7% in the second quarter, sharply above the initial appraisal of a 2.3% gain. The more robust April-June growth mainly reflected higher investment, state and local government spending, and consumer spending than was reported in the initial estimate. McCarthy said investors were also buoyed by strong data on US durable manufactured goods and crude inventories. Durable goods orders in the world’s biggest economy and key global economic growth engine rose 2% in July, boosted by automobiles, the US Commerce Department said. The latest official stockpiles report released mid last week showed a drawdown, indicating healthy demand. Output however slipped only slightly, leaving production levels and overall crude inventories at record levels. Nicholas Teo, market analyst at CMC Markets in Singapore, said, “Elevated US crude inventories, higher OPEC production, and slowing global growth suggest that the supply glut may persist for the rest of the year. “This means any rally in oil prices may be an opportunity to sell,” he added. SINGAPORE NAMPA/AFP