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The recent release of strategic oil supplies has, so far, failed to halt a climb in global oil prices. Picture: REUTERS/NICK OXFORD
The recent release of strategic oil supplies has, so far, failed to halt a climb in global oil prices. Picture: REUTERS/NICK OXFORD

Melbourne/Singapore — Oil prices eased on Wednesday, giving up earlier gains, after China and Japan reported weak economic data, fuelling concern about growth and oil demand in the world’s top consumers.

Brent crude futures were down 34c, or 0.3%, to $104.30 a barrel at 5.01am GMT, while US West Texas Intermediate (WTI) crude futures fell by 46c, or 0.5%, to $100.14 a barrel. Both contracts had surged more than 6% in the previous session.

China’s crude oil imports slipped 14% from a year earlier, extending a two-month slide, as strict measures to curb the spread of Covid-19 affected demand in the world’s top crude importer.

The world’s top crude oil buyer imported 42.71-million tonnes in March, equivalent to 10.06-million barrels a day, data from the General Administration of Customs showed on Wednesday.

Oil prices had rebounded on Tuesday as reports of partial easing of some of China’s tight Covid-19 lockdowns helped stoke bullish sentiment among market players.

However, Asia remains less bullish about China’s Covid-19 situation than overseas markets, said Oanda senior market analyst Jeffrey Halley.

The Chinese city of Shanghai warned on Wednesday that anyone who violates strict Covid-19 lockdown rules will be dealt with strictly, while also rallying people to defend their city as its tally of new cases rebounded to more than 25,000.

On Wednesday, Japan reported its biggest monthly fall in core machinery orders in nearly two years in February, dragged down by a steep drop in demand from IT and other service firms.

Still, oil prices are underpinned by falling Russian oil and gas condensate production while oil cartel Opec has warned it would be impossible to replace potential supply losses from Russia.

Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks, and said Moscow would not let up on what it calls a “special operation” to disarm its western neighbour.

“Statements from Vladimir Putin that negotiations with Ukraine had reached a dead end, and comments from President [Joe] Biden accusing Russia of genocide are reinforcing that the Ukraine Russia situation will not be de-escalating any time soon — another reason to expect that the downside for oil prices is limited,” Halley said.

In the US, crude stocks rose sharply last week while distillate and gasoline inventories dipped, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

The 7.8-million barrel rise in crude stocks for the week ended April 8 reported by API is more than the 900,000 barrels increase estimated in a Reuters poll.

The Energy Information Administration (EIA) will release weekly data at 2.30pm GMT on Wednesday.

Reuters

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