ALBAWABA – Oil prices slipped slightly Wednesday as concerns over sluggish China recovery and the disappointing economic data recently released overshadowed depleting stockpiles, news agencies reported.
Overall, oil prices dropped 1 percent in later sessions Tuesday through Wednesday’s early trading sessions, according to Reuters.
Brent crude futures slipped $0.38 to $84.51 a barrel by 0456 GMT, while West Texas Intermediate (WTI) crude (WTI) declined $0.35 to $80.64 a barrel. Both benchmarks had weakened to their lowest since August 8 on Tuesday.
WTI slipped 2.6 percent in the week’s first two sessions, with crude prices edging lower as stocks and commodities in Asia dropped on concerns over China’s stuttering economy, Bloomberg reported.
According to still-unpublished figures the American Petroleum Institute, United States (US) crude stockpiles shrank 6.2 million barrels last week, unnamed sources told Bloomberg. Inventories at the key Cushing hub in Oklahoma were also seen declining, the New York-based news agency claimed.
"Crude inventories at the Cushing hub are seen to be falling to their lowest level since April. Asian refineries are also snapping up all available US cargoes of oil," ANZ analysts confirmed in a client note.
However, "Concerns that China's faltering economy will weigh on demand offset tight supply in the oil market," even as stockpiles drop, according to the note, as reported by Reuters.
July economic activity data has prompted some economists to flag risks that China, the world's biggest oil importer, may struggle to meet its growth target of about 5 percent for 2023 without more fiscal stimulus.
“With the disappointing turn in China’s economic data dominating headlines lately, sentiments around oil prices are being kept in check” despite the API figures, Yeap Jun Rong, market strategist at IG Asia Pte told Bloomberg.
Official figures on US stockpile levels are due for release later on Wednesday.
Oil prices moving forward
Outlooks for the fourth quarter will "depend on the macroeconomic situation in China primarily, albeit it looks like Saudi will continue to address that via their cuts, if needed", Rystad Energy's research director Claudio Galimberti, told Reuters.
Supply cuts by Saudi Arabia and Russia, part of the OPEC+ group comprising the Organization of the Petroleum Exporting Countries (OPEC) and its allies, have pushed up oil prices over the past seven weeks.
"Persistent negative China data will raise the probability of increased stimulus measures, which would see a rise in commodity demand on broadly low inventory levels delivering a jump in prices," analysts at National Australia Bank explained to Reuters.
