Prices of oil decline as negative data from China fuels worries about demand

9 Aug 2023 , 08:59 AM

Early on Wednesday, oil prices declined as worries about weak demand from China, the world’s largest crude importer, increased in response to negative trade data, outweighing worries about a tighter global supply due to Saudi Arabia and Russia’s production curbs.

Brent crude futures were down 17 cents, or 0.2%, to $86.00 per barrel. American West Texas Intermediate (WTI) crude was down 19 cents or 0.2% at $82.73 per barrel.

The day before, both contracts had a gain of about $1.

The longest winning run from December 2021 to January 2022 was achieved by both benchmarks last week, which was aided by a decrease in OPEC+ supply and expectations that stimulus measures would help China’s oil consumption rebound.

But as major exporters reduced their foreign shipments and domestic stocks continued to rise, China’s crude oil imports in July decreased 18.8% from the previous month to the lowest daily rate since January, according to customs statistics released on Tuesday.

China’s imports decreased 12.4% overall in July, significantly more than the predicted 5% decline. Exports decreased by 14.5% as opposed to the 12.5% decline predicted by economists.

The U.S. Energy Information Administration (EIA) also predicted that American crude oil output will increase by 850,000 barrels per day (bpd) to a record 12.76 million bpd in 2023, surpassing the previous top of 12.3 million bpd in 2019.

According to the EIA, since June, crude prices have been climbing, mostly as a result of Saudi Arabia’s continued production reduction and rising global demand.

Saudi Arabia, the largest exporter in the world, added this week that it could extend or deepen its voluntary output cut of 1 million bpd through the end of September. Russia also announced a 300,000 bpd reduction in oil exports for September.

According to market sources quoting American Petroleum Institute data on Tuesday, U.S. crude oil stocks increased last week while gasoline and distillate stockpiles decreased.

Later on Wednesday, U.S. official stockpile data is expected.

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