Oil unchanged as falling US stocks counter slowing China demand

New York/Singapore — Oil prices were steady on Wednesday, with global benchmark Brent hovering near the one-month low it hit in the prior session, as signs of weakening demand growth in China clashed with the prospect of declining US oil stockpiles.

Brent crude oil futures was down by 4c to $83.69 a barrel by 3.15am GMT. US West Texas Intermediate crude futures also eased 4c to $80.72.

Both benchmarks dropped in the three prior sessions, with Brent crude futures trading as low as $83.30 on Tuesday, the lowest since June 17.

While concerns over Chinese demand continued to weigh on investor sentiment, the drawdown in US inventories was a factor limiting the downside in oil prices, said Priyanka Sachdeva, senior market analyst at Singapore-based brokerage Phillip Nova.

“And steady US retail data points out that the economy is still healthy despite higher borrowing costs. This neutralises fears of a slowdown in the US economy and fears of dented demand for oil.”

China, the world’s top oil importer, saw its economy grow 4.7% in the second quarter, official data showed earlier this week, the slowest growth since the first quarter of 2023.

A stronger dollar had also weighed on oil prices, said ANZ Bank analyst Daniel Hynes in a note. The dollar index was slightly higher for a third consecutive session on Wednesday, making oil more expensive for investors holding other currencies.

In the US, the world’s largest oil producer and consumer, crude oil inventories fell by 4.4-million barrels in the week ended July 12, market sources said, citing data from the American Petroleum Institute.

Analysts polled by Reuters had estimated crude stocks would fall by 33,000 barrels. The US Energy Information Administration will release its official storage report at 2.30pm GMT.

Supporting oil prices, retail sales were unchanged in June as a drop in receipts at auto dealerships was offset by broad strength elsewhere, a display of consumer resilience that bolstered economic growth prospects for the second quarter.

Meanwhile rising geopolitical risk was also helping limit oil price declines, Growmark Energy analysts said.

A Liberia-flagged oil tanker was assessing damage and investigating a potential oil spill after it was attacked by Yemen’s Houthis in the Red Sea, the Red Sea and Gulf of Aden Joint Maritime Information Center (JMIC) said on Tuesday.

Reuters