Mubasher: Oil prices declined on Wednesday driven by weaker imports into China, but the prices remained firm on a drop in US crude inventories along with the re-instated sanctions against Iran.
Earlier in the day, global Brent crude futures traded at $74.50 per barrel (pb), $0.15 lower than their last close, as US Nymex futures shed $0.2 to $69.15 pb from their last session.
Crude imports into China, the world’s largest oil consumer, recovered slightly in July to 36.02 million tonnes or 8.48 million barrels per day (bpd), compared with 8.36 million bpd a month earlier and year-on-year higher from 8.18 million bpd.
However, this was the third lowest level seen this year until now, due to dropping demand from the Asian country’s independent refineries, also known as “teapots.”
The escalating trade spat between the US and China sent a shudder of fear among investors on the prospect of waning global demand for oil, Singapore-based brokerage Phillip Futures stated on Wednesday.
Nevertheless, the market had some support, after industry data released by the American Petroleum Institute (API) on Tuesday showed a decline of 6 million barrels to 407.2 million in the week ended 3 August.
Official data pertaining the US crude stockpiles are due to be released by the Energy Information Administration (EIA) later in the day.
As for crude production, the EIA fractionally cut its forecasts for average US output to 10.69 million bpd, from its previous 10.79 million bpd.
In the same vein, the White House’s re-imposed sanctions against Iran, the Organization of Petroleum Exporting Countries’ (OPEC) third-largest producer, also buttressed oil prices. The sanctions would hit the Persian Gulf country’s purchases of US dollars in which crude is traded, metals and other dealings, coal, and industrial software, as well as its auto and carpet industries.
It is worth noting that Iran shipped about 3 million bpd in September, which is around 3% of global demand.
By 8:15 am GMT, Brent crude futures stabilised at $74.65 pb, while Nymex futures inched up 0.03% to $69.19 pb.