Oil prices were mixed in Asian trading on Wednesday, following four straight sessions of losses. The impact of OPEC+ cuts on supply has also raised concerns about the worsening demand outlook in China.
Brent crude futures were up 1 cent at $77.21 a barrel by 04:38 GMT. West Texas Intermediate (WTI) crude oil futures fell 4 cents to $72.28 a barrel.
Both indicators closed at their lowest level since July 6 in the previous session, with WTI falling for four consecutive days.
The Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+), agreed late last week to a voluntary production cut of about 2.2 million barrels per day (bpd) for the first quarter of 2024. These reductions include extending the Saudi and Russia’s voluntary cuts of 1.3 million barrels per day.
This was the only positive news in the last few days as Saudi and Russian officials have stated that OPEC+ cuts may be extended or deepened depending on current market conditions. Beyond this, there is no positive catalyst for oil prices in the near term.
While some analysts were bearish on price movements, concerns about the impact of the Israel-Hamas conflict on supply dampened price declines somewhat. In addition, fears of a potential escalation in the Israel-Hamas conflict have re-emerged after the United States blamed Iran for the attack on the ships. However, due to its weak impact, all can provide a short-term technical recovery.
The downward trend in oil prices continues. There is a significant increase in inventories in the US and oil prices are likely to fall below $70 per barrel. Concerns about the economic health of China, the world’s No. 2 oil consumer, which could limit overall fuel demand, also weighed.
Moody’s downgraded the outlook on China’s A1 rating to negative from stable, citing structural and persistently low medium-term economic growth and increasing risks related to continued contraction in the real estate sector.
China will release preliminary trade data, including crude oil import data, on Thursday.
Crude oil and fuel stocks in the US increased in the week to December 1, market sources said on Tuesday, citing figures from the American Petroleum Institute (API).
Sources said crude oil stocks increased by 594,000 barrels. Gasoline stocks increased by 2.8 million barrels, while distillate stocks increased by approximately 1.9 million barrels.
US government data on inventories will be released on Wednesday.