Oil prices slip as US inventories drop and China demand worries grow
Oil prices on the New York Fuel Exchange are declining for yet another session, report brokers, despite data showing a decrease in crude oil inventories in the USA, which would typically indicate an increase in demand.
A barrel of West Texas Intermediate crude oil for August deliveries costs £64.80 on NYMEX in New York, down 0.11%. Meanwhile, Brent oil on ICE for September is priced at £67.13 per barrel, down 0.12%.
Industry estimates indicate a further decline in crude oil inventories in the USA. The American Petroleum Institute (API) reported that crude oil inventories in the USA decreased by 4.44 million barrels last week. According to API calculations, inventories at the Cushing hub dropped by 746,000 barrels during this time.
What's happening in China? Investors' attention on the middle kingdom
According to the API report, gasoline inventories increased slightly by 365,000 barrels, while distillate fuels rose significantly by 4.92 million barrels.
Meanwhile, investors are concerned about weak demand prospects for crude oil in China, the world's largest resource importer.
Jun Rong Yeap, market strategist at IG Asia Pte Ltd, said the weaker data on economic growth in China "cast some doubts on whether market participants are being overly optimistic around Chinese oil demand outlook."
He stated that hopes for stronger economic stimulus from China after the Third Plenum of the Chinese Communist Party have also somewhat faded.
The Third Plenum of the Chinese Party, which is taking place this week, is usually a forum for adopting long-term political and economic reforms. However, observers generally believe that major initiatives to support economic growth in China are unlikely this time.
Meanwhile, Russia plans to make additional cuts in oil production to compensate for exceeding the set quota under the OPEC+ alliance.
Sources close to the matter indicate that additional production cuts could occur in the summer and early autumn when Russia needs less oil for domestic consumption.
