Oil slips after Chinese data disappoints
China reports weaker than expected July economic data as US crude oil stocks rise
Tokyo/Singapore — Oil prices fell on Wednesday on disappointing economic data from China and a rise in US crude inventories, erasing some of the sharp gains in the previous session on signs of an easing in Sino-US trade tensions.
Brent crude was down 64c, or 1%, at $60.66 a barrel at 4.46am GMT, after rising 4.7% on Tuesday, the biggest percentage gain since December.
US oil was down 75c, or 1.3%, at $56.35 a barrel, having risen 4% the previous session, the most in just over a month.
China reported a raft of unexpectedly weak July data, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the US intensifies.
“Deteriorating China industrial output and consumer spending suggest the fundamental picture isn’t great and the demand for energy may be under pressure,” said Margaret Yang, market analyst at CMC Markets.
Profit taking after Tuesday’s sharp gains also weighed on crude prices on Wednesday, analysts said.
“The moves in oil were so outsized overnight that some profit taking in Asia was logical,” said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda.
Benchmark crude prices surged on Tuesday after US President Donald Trump backed off his September 1 deadline for 10% tariffs on some products affecting about half of the $300bn target list of Chinese goods.
But with about $110bn worth of Chinese imports still subject to the tariffs increase in September, the delay will not solve the core issues between the US and China, said Yang.
“Markets will perhaps soon come down to earth and face the reality of a world of elevated trade tariffs, slower growth and policy inconsistency.”
Markets have been pummelled in recent weeks amid tough talk from Trump on trade.
China’s commerce ministry said in a statement on Tuesday that US and Chinese trade officials spoke on the phone and agreed to talk again within two weeks.
Data from industry group the American Petroleum Institute (API) showed US crude stocks unexpectedly rose last week.
Crude inventories increased by 3.7-million barrels to 443-million, compared with analyst expectations for a decrease of 2.8-million barrels, the API said.