Oil prices slumped on Tuesday after China’s imports and exports fell much more than expected in July and the world’s largest oil importer showed signs of weak growth, but losses were limited by anticipated supply tightness.
Brent crude futures fell 29 cents, or 0.34%, at 0641 GMT to $85.05 per barrel, while West Texas Intermediate crude (WTI) fell 25 cents, or 0.31%, to $81.69 a barrel.
Oil imports to China in July totaled 43.69 million mt, or 10.29 million barrels per day, according to data released by the General Customs Administration on Tuesday. This is down 18.8% from June, but still up 17% from a year ago.
At the same time, China’s overall imports fell 12.4% and exports 14.5% year-on-year. The pace of export decline was the fastest since February 2020 and worse than analysts had expected.
Despite the dismal data, some analysts are still positive about China’s fuel demand outlook from August to early October as crude oil processing rates remain high.
September has been the busiest season for construction and manufacturing activities, and gasoline consumption should benefit from summer travel demand. It is quite normal for the demand to decrease gradually after October.
On the supply side, Saudi Arabia, the world’s largest exporter, said it would extend the 1 million barrels per day voluntary oil production cut for another month to include September, adding that it could extend the cut beyond that date or make a deeper cut.
Russia also said it would cut oil exports by 300,000 barrels per day in September.
Saudi Arabia’s decision to extend production cuts until September despite oil rising above $80 a barrel shows the kingdom is targeting a price higher than $80.
Investors are also awaiting US oil and fuel products inventory data. A survey on Monday showed estimates of a 200,000-barrel drop in crude oil inventories and a 200,000-barrel increase in gasoline inventories.