Aug 21 2024: Oil prices held steady on Wednesday following a series of declines that pushed Brent crude down to nearly $77 per barrel. These declines were driven by persistent concerns over weakening Chinese demand and a reduction in fears regarding the spread of conflict in the Middle East.
By 0806 GMT, Brent crude futures remained stable at $77.20 per barrel, while U.S. West Texas Intermediate (WTI) crude dipped slightly by 7 cents to $73.10 per barrel.
Brent had shed 6.2% of its value since peaking above $82 the previous Monday, ending Tuesday’s trading at a two-week low of $77.20. During the same period, WTI fell by 7.5%.
The downturn was fueled by worries about demand from China, the world’s largest crude importer, and a decrease in concerns over the possibility of the Middle East conflict escalating to threaten oil supplies.
According to market sources citing the American Petroleum Institute, U.S. crude oil stocks were expected to have risen last week, although gasoline and distillate stocks reportedly declined.
As the world’s largest oil producer and consumer, growing U.S. inventories suggest an oversupply that could put downward pressure on prices. The official U.S. government inventory estimates are scheduled for release on Wednesday at 10:30 a.m. (1430 GMT).
Meanwhile, U.S. Secretary of State Antony Blinken concluded a trip to the Middle East aimed at brokering a ceasefire agreement in Gaza. Blinken, along with mediators from Egypt and Qatar, has raised hopes for a U.S. “bridging proposal” that could narrow the gaps between the two sides in the 10-month-old conflict.
“Hopes for a ceasefire between Israel and Hamas have weighed on oil prices, along with ongoing demand concerns,” noted ING commodities strategists.
“While weaker demand from China has been widely reported, refinery margins globally have also been under pressure throughout August, indicating that these demand issues are not confined to China alone,” they added.
China’s economic struggles, including weak processing margins and low fuel demand, have continued to impact the market, leading to reduced operations at both state-run and independent refineries. Additionally, China’s imports of crude oil from its top supplier, Russia, fell by 7.4% year-over-year in July, with fuel oil imports declining for the third consecutive month, according to customs data released this week.
