By Stephanie Kelly
NEW YORK (Reuters) – Oil prices fell by about 1% on Tuesday after data showed China’s crude imports and exports fell much more than expected in July in yet another sign of a sluggish post-Covid rebound for the world’s largest oil importer.
Brent crude futures were down 78 cents, or 0.9%, at $84.56 a barrel at 11:09 a.m. EDT (1509 GMT). U.S. West Texas Intermediate crude dropped 81 cents, or about 1%, to $81.13. Both contracts fell by $2 earlier in the session.
China’s July oil imports were down 18.8% from the previous month to the lowest daily rate since January, but still up 17% from a year earlier.
Overall, China’s imports contracted by 12.4% in July, far steeper than the expected 5% drop. Exports fell by 14.5%, compared with a fall of 12.5% tipped by economists.
In India, fuel consumption slipped to a 10-month low in July, government data showed on Tuesday, as monsoon rains restricted mobility. India is the third-biggest oil importer and consumer.
Despite the gloomy data, some analysts were still positive about China’s fuel demand outlook for August to early October.
The peak season for construction and manufacturing activity starts in September and gasoline consumption should benefit from summer travel demand, said CMC Markets analyst Leon Li. Demand is expected to decrease gradually after October, he added.
On the supply side, Saudi Arabia last week said it would extend a voluntary oil output cut of 1 million barrels per day (bpd) for another month to include September, keeping the door open for further cuts by the world’s biggest oil exporter.
Russia also said it would cut oil exports by 300,000 bpd in September.
The decision to extend cuts into September, despite Brent futures rising above $80 per barrel, suggests Riyadh may be targeting a higher price than $80, said Vivek Dhar, mining and energy commodities strategist at Commonwealth Bank of Australia.
Still, some analysts are sceptical about how much supply the cuts are actually taking off the market, as other members of the Organization of the Petroleum Exporting Countries like Libya and Venezuela have increased production, said Andrew Lipow, president at Lipow Oil Associates in Houston.
“The production cuts have been far less than the announced quota cuts,” Lipow said.
Investors are also awaiting U.S. oil and fuel products inventory data.
Five analysts polled by Reuters estimated on average that crude inventories fell by about 200,000 barrels in the week to Aug. 4. Industry data is due later on Tuesday. [EIA/S]
“Overlapping, concentric and oppositional influences continue to bring nervousness to our market and oil prices will have to lean again on the state of world inventories to keep its winning ways,” said John Evans, of oil broker PVM.