Oil futures were marginally lower early Wednesday, with the U.S. benchmark threatening to continue a pullback from its 2023 high on worries about China’s economic outlook.
Traders were also awaiting official data on U.S. crude inventories after an industry report was said to show a larger-than-expected decline.
Price action
-
West Texas Intermediate crude for September delivery
CL00,
+0.22% CLU23,
+0.22%
fell 8 cents, or 0.1%, at $80.91 a barrel on the New York Mercantile Exchange. -
October Brent crude
BRN00,
+0.19% BRNV23,
+0.19% ,
the global benchmark, was off 11 cents, or 0.1%, at $84.78 a barrel on ICE Futures Europe.
Market drivers
Crude has pulled back after a run of seven straight weekly gains for both WTI and Brent. A string of disappointing China data and worries about the country’s property sector have sparked concern about demand from one of the world’s largest oil consumers.
That’s served to dampen the crude rally, which has been driven by expectations for a supply deficit in the second half of the year, enhanced by production cuts by OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia. In particular, Saudi Arabia implemented a production cut of 1 million barrels a day in July and recently extended it through September, while Russia has also moved to additionally curb crude exports.
“Despite analysts expecting supply to tighten in the second half of the year, recession fears and the sluggish economic recovery in China are currently dominating the mood in the oil market. Longer term, some of the key market factors affecting prices suggest a less rosy outlook for oil and retail investors seem to be responding with caution,” said Michael Hall, head of distribution at Spectrum Markets, a Frankfurt-based trading venue for securitized derivatives.
Supply data was also in focus. The American Petroleum Institute late Tuesday said U.S. crude inventories fell by 6.2 million barrels last week, according to a source citing the data, with gasoline inventories up 700,000 barrels and distillate stocks down 800,000 barrels.
The Energy Information Administration’s official U.S. inventory figures are set for release Wednesday morning.
Analysts surveyed by S&P Global Commodity Insights, on average, expect crude inventories to show a 2.26 million barrel drop in the week ended Aug. 11. Gasoline stocks are seen down 1.6 million barrels, with distillates mostly unchanged.
This story originally appeared on Marketwatch
