Oil prices stabilised in Asian trading on Wednesday, as indications of tighter U.S. supplies helped alleviate some concerns about weakening global demand.
The crude market had experienced a significant decline over the past week due to weak economic data from China, the world’s largest oil importer, which intensified worries about slowing demand.
As of 22:08 ET (02:08 GMT), Brent oil futures for September delivery saw a slight increase of 0.1% to $83.80 per barrel, while West Texas Intermediate crude futures also rose 0.1 per cent to USD 79.80 per barrel.
The American Petroleum Institute (API) released data on Tuesday showing a larger-than-expected decrease in U.S. oil inventories for the week ending July 12. Stocks fell by 4.4 million barrels, surpassing expectations of a 33,000-barrel draw. This API report often precedes similar findings in official inventory data, which is scheduled for release later on Wednesday. It also suggests a third consecutive week of inventory reductions in the U.S., likely due to increased travel demand during the summer season.
Traders remained vigilant about potential supply disruptions stemming from geopolitical tensions in the Middle East. Israel’s ongoing strikes on Gaza have maintained high tensions with Hamas and Hezbollah.
Yemeni groups have been conducting repeated attacks on vessels in the Red Sea, potentially affecting crude shipments. These factors have led traders to incorporate a risk premium into oil prices, although the exact impact of Middle Eastern disruptions on crude supplies remains unclear.
Recent media reports indicated that Russia and members of the Organization of Petroleum Exporting Countries (OPEC) have reaffirmed their intentions to limit production and tighten global oil markets.
Despite these supportive factors, concerns about slowing Chinese demand continued to exert downward pressure on oil prices. A series of weak economic indicators from China, coupled with data showing a sharp decline in crude imports to the country in June, have contributed to this bearish sentiment in the oil market.