Oil continued its declines on Thursday after the previous day’s slump as China’s May industrial production and retail sales growth did not meet forecasts and fueled concerns about a weak economic recovery.
Brent crude futures were down 21 cents, or 0.3%, to $72.99 a barrel as of 0400 GMT. West Texas Intermediate (WTI) crude was down 20 cents, or 0.3%, at $68.07 a barrel.
Both indicators fell 1.5% on Wednesday after the Federal Reserve’s predictions that more rate hikes would be needed this year, in turn, triggered fears that a high-interest rate environment would slow the economy and reduce oil demand.
Data from China on Thursday were ineffective in easing demand concerns, with signs that the economic recovery is losing momentum.
China’s industrial output rose 3.5% in May, lagging behind April’s 5.6% growth. May stayed in slightly below analysts’ expected 3.6% gain as manufacturers struggled with weak domestic and international demand.
The pessimistic Chinese data is putting pressure on oil prices. A key indicator of consumer confidence, the country’s retail sales rose 12.7%, missing growth forecasts of 13.6%, and fell from 18.4% in April.
China’s post-COVID recovery has had its ups and downs, and its soft first-quarter economic situation has debunked all forecasts of a recovery that was hoped to push China’s global oil demand to record levels.
U.S. crude inventories increased by nearly 8 million barrels in the week ended June 9, in yet another sign of decline in oil demand, according to data from the Energy Information Administration (EIA) on Wednesday. Analysts had forecast a 500,000-barrel drop. Gasoline and diesel stocks also rose more than expected. In fact, apparent global oil inventories also continue to rise.
Looking at the US, the driving season appears to have had a weak start, and while overall oil demand looks healthy, it still points to a 0.3 million barrels per day year-on-year decline.
Adding to concerns about weak fuel demand in the market, the European Central Bank is almost certain to raise borrowing costs to 22-year highs on Thursday, leaving the door open for more hikes.
The Bank of England has not yet finished raising interest rates as it struggles with inflation, according to a survey.
