Oil Rallies Despite Weak Demand Outlook
Oil prices saw marginal gains amid much fluctuation on Thursday after climbing to multi-month highs on disappointing economic data both from China and the US, casting doubts on the demand outlook in the largest oil-consuming countries.
International benchmark Brent crude traded at $87.69 per barrel, a 0.16% gain from the closing price on Wednesday of $87.55 per barrel. The American benchmark West Texas Intermediate (WTI) traded at the same time at $84.48 per barrel, up 0.09% from the session close of $84.40 per barrel on Wednesday.
Brent had climbed to the highest level since Jan. 27 with tightening global supply as Saudi Arabia and Russia imposed extended output and export restrictions through September, with the possibility of further cuts in the future.
However, data released by the US Energy Information Administration (EIA) on Wednesday showed that commercial crude oil inventories in the country increased by 5.9 million barrels during the week ending Aug. 4, easing the price uptrend during early Asian trade.
Sluggish data in the world’s top oil-consuming country reflected weak demand after the global credit rating agency Moody’s downgraded some small and medium-sized US banks, and additional institutions may be downgraded as well.
Investors are now bracing for US consumer price index data for July due on Thursday, which will provide a glimpse of the US Federal Reserve’s next monetary decision on interest rates.
Uncertainties around China’s post-pandemic recovery are also adding to demand woes and putting further downward pressure on prices.
The country posted bearish data on consecutive days, with the Producer Price Index (PPI) and the Consumer Price Index (CPI) declining beyond expectations and intensifying deflationary concerns. China’s crude oil imports also fell 18.8% month over month in July to roughly 10.29 million barrels per day (bpd).
