Early Asian trade on Thursday saw a modest increase in oil prices, holding near 10-month highs as indications of another fall in U.S. stocks contributed to predictions that the world’s petroleum supplies will continue to tighten this year. The world’s largest oil importer, China, was the subject of attention as it battled a sluggish economic …
Early Asian trade on Thursday saw a modest increase in oil prices, holding near 10-month highs as indications of another fall in U.S. stocks contributed to predictions that the world’s petroleum supplies will continue to tighten this year. The world’s largest oil importer, China, was the subject of attention as it battled a sluggish economic recovery. Chinese trade statistics anticipated later in the day drew particular interest.
According to industry estimates, the amount of U.S. oil in storage likely decreased for a fourth consecutive week as refiners increased production in anticipation of the high summer travel season. The information was released shortly after Saudi Arabia and Russia announced larger-than-anticipated production cuts that will last through the end of 2023. Crude prices rose sharply as a result of the reduction, reaching their highest levels since early November. In the upcoming months, it is anticipated that tighter global supply would maintain prices high and support oil markets through any potential decreases in demand.
By 20:23 ET (00:23 GMT), West Texas Intermediate crude prices increased 0.1% to $87.66 a barrel, while Brent oil futures increased 0.1% to $90.73 a barrel. Crude stockpiles decreased by 5.5 million barrels (mb) in the week ending September 8, above estimates for a 1.4 mb decrease, according to data from the American Petroleum Institute. The weekly draw followed an 11.5 mb decline that was significantly larger than anticipated in the week ending August 25. The reading often serves as a preview of the Energy Information Administration’s inventory data, which is due later in the day. To satisfy the rising demand for fuel during the busy summer travel season, American refiners have increased production during the past few months. The assumption of tighter global supplies in the remaining months of the year was increased by consistent weekly inventory draws, particularly in light of the larger-than-anticipated Russian and Saudi supply cuts. However, after the Labour Day holiday, U.S. fuel demand typically declines, leading some investors to wonder if the steady inventory decreases will continue in the upcoming weeks.
On the demand front, investors were entirely preoccupied with the upcoming trade statistics from China. The overall fall in imports and exports is anticipated to have slowed down in August. However, China’s oil imports will be a particular area of attention, especially in light of data from July that revealed a significant decline in crude exports to the nation. In the first seven months of the year, massive inventories were being built by Chinese refiners, which some analysts claim is what caused the nation to import so much oil. But if the economy continues to deteriorate, this trend may change in the upcoming months. The second-largest economy in the world continued to experience pressure through August, according to a number of recent economic data.
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