Oil prices decline as China's problems offset the positive effects of increasing US fuel consumption

10 Aug 2023 , 10:04 AM

After reaching new highs the previous session, oil prices dipped in early Asian trade on Thursday as worries about the Chinese economy outweighed the positive effects of sharp reductions in U.S. fuel stocks and Saudi and Russian supply cuts.

Brent crude was down 20 cents, or 0.2%, to $87.35 per barrel after closing at its highest level since January 27 the previous day.

The price of West Texas Intermediate crude (WTI), which reached its highest level since November 2022, dropped 23 cents, or 0.3%, to $84.17.

According to figures released by China on Tuesday, crude oil imports dropped 18.8% from June to July, reaching their lowest daily rate since January.

As the world’s second-largest economy fought to restore demand, China’s consumer sector also experienced deflation in July, and factory-gate prices continued to decrease.

Although distillate inventories, which include diesel and heating oil, fell by 1.7 million barrels last week, versus analysts’ expectations in a Reuters poll for both to hold mostly steady, prices were supported by government data released on Wednesday that showed U.S. gasoline stocks fell by 2.7 million barrels. 

The top exporter Saudi Arabia’s intention to extend its voluntary production cut of 1 million barrels per day for one additional month, to cover September, also helped to maintain prices. Russia also announced a 300,000 bpd reduction in oil exports for September.

Additionally, investors were anticipating Thursday’s release of the U.S. Consumer Price Index (CPI), which is likely to indicate a small year-over-year uptick.

For feedback and suggestions, write to us at [e-mail]