Brent oil trims losses after China data

Brent futures trimmed losses to trade above $47/barrel levels after upbeat China data caught markets off guard and strengthened risk sentiment in Asian markets.

Trades above hourly 50-MA

Prices trade above hourly 50-MA level of $47.13 levels after having found bids at the session low of $46.77 on strong China data. Still, the futures are having a tough time extending gains despite strong China data, improvement in the risk sentiment and a break above hourly 50-MA.

Moreover, at 521.8 million bbl, crude stockpiles remain at historically high levels for this time of year. This could be capping buying interest in oil. The data released earlier this week showed commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, fell 2.5 million bbl during the week ended July 8.

Risk-on in the markets could continue to support oil prices ahead of the weekly US rig count release.

Brent Technical Levels

Futures currently trade around $47.20/barrel. The immediate resistance is seen at $47.51 (July 7 low), above which prices could test $48.34 (50% of May 2015 high – Jan 2016 low). On the other hand, a breakdown of support at $46.74 (Asian session low) could yield a drop to $45.87 (July 11 low).