Oil retreats on US demand worries despite China stimulus, supply



Oil fell on US demand concerns despite Chinese stimulus and supply<br />













































July 19, 2023


Creation time: 11:06 AM


Last updated: 11:06 AM



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Singapore, July 19 (BNA): Global oil prices fell today, Wednesday, after opening higher in the beginning of Asian trading, as the markets were burdened by US demand concerns in exchange for China’s pledge to support economic growth, tightening Russian supply and the decline in US inventories.


Brent crude futures fell 1 cent to $79.62 a barrel at 0615 GMT, while US West Texas Intermediate crude fell 15 cents to $75.60 a barrel, Reuters reported.


“There are many positive drivers for oil prices now on the supply and demand front, and while we expect WTI to bounce back around $80 a barrel, this does not indicate a bull market because the pessimistic attitude of global central banks remains a downside to risk,” he said. CMC Markets analyst Leon Lee has an “appetite”.


“With the Fed likely to raise interest rates for the last time in July, concerns about US demand are likely to persist which will cap gains in oil prices.”


Economists remain concerned that inflation in the United States may not fall fast enough even with interest rates raised. A Reuters poll showed that core inflation, which excludes food and energy prices, will only be slightly lower or stay near the current level of just under 5% by the end of the year.


However, on a positive note, China’s top economic planner pledged on Tuesday that it would implement policies to “restore and expand” consumption in the world’s second-largest economy, which could boost demand for oil, as consumers’ purchasing power remained weak.


“So far, as long as we assume that stimulus in China will be successful, oil stocks will shrink significantly — even if Europe falls into a mild recession,” said Claudio Gallimberti, director of North America research for Rystad Energy.


He added that this means that prices may still breach the upper end of the current market range of $80 per barrel.


On the supply side, Russia will cut its oil exports by 2.1 million metric tons in the third quarter in line with the planned voluntary cuts in exports of 500,000 barrels per day in August, according to the Energy Ministry.


Price support also came from the expected decline in US stocks, after data from the American Petroleum Institute, an industry group, showed declines in crude oil, gasoline and distillate inventories last week.


Traders will be watching for confirmation of the stock pullback in data from the US government’s Energy Information Administration on Wednesday at 10:30 AM ET (1430 GMT).






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