Oil prices remain unchanged as rate concerns and China's economic woes outweigh reduced supplies

21 Aug 2023 , 10:18 AM

On Monday, oil prices held stable with Brent remaining above $80 a barrel as investors weighed tightening supply brought on the OPEC+ cuts with lingering worries about the growth of global demand in the context of high interest rates.

Brent crude had fallen 8 cents to $84.72 per barrel, while U.S. West Texas Intermediate crude had risen 3 cents to $81.28 per barrel. Tuesday marks the expiration of the September WTI contract, while the more active October contract dropped 3 cents to $80.63 per barrel.

Last week, both front-month benchmark prices ended a 7-week winning streak to post a weekly loss of about 2% as the U.S. dollar rose on speculation that interest rates would stay higher for longer and as worries about China’s escalating property crisis and its slowing economic growth and oil demand increased.

As refiners reduce purchases after supply restrictions by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, drove global prices above $80 a barrel, the top crude importer in the world is drawing from record inventories accumulated earlier this year.

According to Chinese customs data, Saudi Arabia’s shipments to China decreased 31% from June while Russia remained the Asian giant’s top supplier thanks to its inexpensive crude.

Meanwhile, encouraged by high export margins, Chinese refiners increased exports of refined products in July.

According to a study released by Baker Hughes on Friday, the number of operating oil rigs in the United States, a leading predictor of future output, dropped by five to 520 last week, the lowest level since March 2022.

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