Crude Oil Settles Higher

The US Energy Information Administration reported a 1.527 million barrel drawdown in crude stockpiles last week. The consensus of analysts was calling for a 2.957 million barrel decline during the period. Refinery capacity utilization increased to 95.40%, compared to expectations for a decline to 94.10%, while refinery inputs rose 123,000 barrels per day to 17.40 million. Brent crude futures have broken above the key psychological level of $50.00 a barrel.

However, the short-term upside could be capped on the back of ongoing high supplies from the Organization of the Petroleum Exporting Countries and production in the US that is still rising. Data compiled by Thomson Reuters showed crude shipments by OPEC and Russia hitting a year-to-date high of 32.000 million bpd in July, up from 30.500 million bpd in January. Brent futures were last seen trading around $52.10 a barrel, pulling back from earlier session highs.

Activity in the Chinese service sector expanded in July, albeit at a slightly slower pace, a private survey showed early Thursday.  The Caixin China services PMI fell to 51.5 in July from 51.6 in June, matching the April reading.  A figure above 50 indicates expansion, while a level below that points to a contraction in activity. Apart from coinciding with the lowest since May of 2016, the data serves as further evidence of the potential for soft period in the sector following the tepid official data.

The services sector accounted for close to half of Chinese economic activity in the first half of the year, increasing by 7.70% during the period and easily surpassing the overall GDP growth rate of 6.90%. The USDCNH pair is gaining in Thursday morning trade to currently hover around 6.7320.