Expected U.S. oil stock decrease drives up oil prices, but China's economic woes mitigate the gain

22 Aug 2023 , 09:42 AM

Tuesday’s early trading saw an increase in oil prices ahead of data that was later anticipated to show a reduction in U.S. crude oil and gasoline stocks, but the upside was constrained by ongoing worries over a downturn in China’s economy.

Brent crude was trading 10 cents higher at $84.56 per barrel and U.S. West Texas Intermediate crude was up 9 cents at $80.81 per barrel. The September WTI contract was up 11 cents at $80.23 per barrel.

An early Reuters poll indicated that U.S. crude oil and gasoline stocks were likely to have decreased last week. The American Petroleum Institute industry organization is scheduled to reveal statistics later on Tuesday.

On Wednesday, the U.S. Department of Energy’s statistical division, the Energy Information Administration, is scheduled to publish its own figures.

The forecast for demand for oil and a wide range of consumer products has been dampened as a result of recent U.S. economic figures that have increased expectations that the Fed would keep rates higher for longer.

Additionally, China, the second-largest oil user in the world, is experiencing economic uncertainty, which has put pressure on oil prices.

After China’s central bank reduced its one-year loan rate just minimally, disappointing the market, which had anticipated more aggressive stimulus measures despite a quick loss of economic momentum, Brent and U.S. crude oil concluded the day Monday at a loss.

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