Oil prices fell on Tuesday as the market may continue to export through Iraq’s Ceyhan oil terminal. While this may have eased the supply tightness caused by the OPEC+ cut, the faltering Chinese economy weighed on the demand outlook.
Brent crude fell 11 cents to $84.35 a barrel as of 06:51 GMT, while the more active West Texas Intermediate (WTI) October contract fell 10 cents to $80.02 a barrel.
The front-month WTI contract that expired in September rose 17 cents to 80.89 a barrel.
Crude oil is struggling to hold its ground amid signs of easing supply shortages.
After the arbitration decision of the International Chamber of Commerce (ICC), Turkiye stopped Iraq’s daily exports of 450 thousand barrels from the Northern Iraq-Turkiye pipeline on March 25.
Iraqi Oil Minister Hayan Abdel-Ghani arrived in Turkiye’s capital Ankara on Monday to discuss various issues, including the resumption of oil exports from the Ceyhan oil terminal.
More Iraqi crude arriving on the market as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) extend and deepen production cuts could help ease the shortage of crude oil.
On the other hand, pessimism about the economic outlook in China, the world’s second-largest oil consumer, continued to suppress oil prices and increase concerns about fuel demand.
China’s economic weakness is putting pressure on oil prices, and Beijing appears determined to avoid large-scale fiscal stimulus.
China’s central bank only modestly cut its one-year lending rate, disappointing the market, which expects more aggressive stimulus despite the rapid loss in economic momentum.
Global demand growth for mobility fuels is estimated to have declined to 0.6 million bpd in the reference week ending August 12.
Since the start of the year, it was stated that the growth in demand for mobility fuels has decreased to 1.6 million barrels per day compared to the same period last year, as China’s base effect is now out of the numbers
On the oil stock side, US crude and gasoline inventories are expected to drop for last week.
The American Petroleum Institute industry group (API) will release its data on Tuesday. The Energy Information Administration (EIA), the statistical arm of the US Department of Energy, will release its own data on Wednesday.
The market is also focusing on the US’s preliminary PMI data for August and the Fed’s annual economic symposium to be held later this week.
Economic data from the US in recent weeks has bolstered expectations that the Fed will keep interest rates higher for longer, casting a shadow on the demand outlook for oil and a wide range of consumer goods.