Oil prices gain ground, dollar edges up

Oil futures tilted higher in Asian trade with US crude off January 26 lows, while Brent climbed from February 18 lows, as the dollar index scaled July 14 highs. 

It comes ahead of a spate of US data later today, and amid ongoing negotiations between the US and Iran  on the nuclear deal, which might open up Iranian exports to the world. 

As of 05:39 GMT, US crude futures due in September rose 0.43% to $90.94 a barrel, while Brent October futures rose 0.50% to $97.06 a barrel, as the dollar index rose 0.08% to 109.09.

From the US, the manufacturing PMI is expected down to 51.8 in August from 52.2, while the services PMI is expected up to 49.8 from 47.3. 

US new home sales are expected down to 574 thousand, compared to a 8.6% drop to 590 thousand in June. 

The People's Bank of China cut one-year lending rates by 5 basis points to 3.65% from 3.7%, and mortgage-bound five-year interest rates by 15 basis points to 4.3%.

Chinese prime minister Li Keqiang asked local governments that represent 40% of total Chinese GDP to take more measures to support the economy and the real estate sector.

Latest World Health Organization data showed Covid 19 infections at 590.66 million cases, with total deaths at 6.440 million.

Recent data showed Lithium, and other minerals producers in China were forced to close their operations for a few days due to the worst heat wave in six decades.

OPEC General Secretary Haitham Al Ghais expressed his optimism for the oil sector in 2023 and sees the world as dealing properly with inflation, while asserting the readiness for OPEC to cut or increase output according to market conditions.

He pointed to concerns about an economic slowdown in China that might impact oil demand, and other worries about weaker investments in the energy sector compared to overall demand growth.

He nonetheless believes such concerns, which nosedived oil prices by 16% this month, to be only transient, noting that oil producers worldwide have reached their upper limit capacity in output already.

Chinese oil refineries output fell to 12.53 million bpd in July, the lowest since March 2020, while oil imports in China rose to 8.79 million bpd recently as travel activities improved.

Otherwise, OPEC recently cut down estimates for global oil demand growth by 260 thousand bpd to 3.1 million bpd, yielding an expected total of 100 million bpd in 2022.

Baker Hughes data showed US oil rigs remained flat last week at 601 rigs, while rising in July for the 24th month in a row.

US output also stabilized last week at 12.1 million bpd, the highest since April 2020, but still down 1 million bpd, or 8% from a record high at 13.1 million bpd reached in March 2020.