WTI, Brent fall on worries about China

U.S. crude oil futures rose Thursday after second-quarter economic growth came in stronger than expected.

Gross domestic product in the U.S. increased at a 2.8% annualized pace, beating economists’ forecasts of 2.1% growth. U.S. crude and gasoline inventories also declined last week, indicating an uptick in demand.

Here are today’s energy prices:

• West Texas Intermediate September contract: $78.07 per barrel, up 46 cents, or 0.59%. Year to date, U.S. crude oil has gained 8.9%.
• Brent September contract: $81.84 per barrel, up 13 cents, or 0.16%. Year to date, the global benchmark is ahead 6.3%.
• RBOB Gasoline August contract: $2.44 per gallon, little changed. Year to date, gasoline is up 16.3%.
• Natural Gas August contract: $2.05 per thousand cubic feet, down 6 cents, or 2.93% Year to date, gas is down 18.3%.

Oil futures traded negative earlier in the session amid concerns about the health of China’s economy after the country’s central bank cut rates twice in a week.

The People’s Bank of China slashed interest rates in a unexpected move Monday, followed by a surprise cut to its medium term facility lending rate on Thursday. China’s government also announced more stimulus to boost weak consumption.

“The semi-panicky moves are increasing concerns that Chinese energy demand may be further into the future than expected,” Bob Yawger, executive director of energy futures at Mizuho Securities, told clients in a note Thursday.

 “Unlike the US which is poised to cut rates as higher rates tame inflation, China is cutting rates to stimulate the economy and avoid a deflationary spiral,” Yawger wrote.

China’s oil imports were down 10.7% year over year in June, while refined product imports fell 32% over the same period, according to customs data.

“Looking at the high-frequency indicators, the drop is likely driven by continued weakness in Chinese demand and some pick-up in Iranian exports,” Amarpreet Singh, energy analyst at Barclays, told clients in a Thursday note.