Crude oil extends losses as weak demand outlook lingers

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Crude Oil prices fell on Tuesday as bleak economic data from top crude buyer China renewed fears of a global recession.

Brent crude futures fell 73 cents, or 0.8%, to $94.37 a barre. WTI crude futures dipped 44 cents, or 0.5%, to $88.97 a barrel.

Oil futures fell about 3% during the previous session.

China’s central bank has cut lending rates to revive demand as the economy slowed unexpectedly in July, with factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.

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China’s fuel product exports are expected to rebound in August to near a year high after Beijing issued more quotas, adding pressure to already-cooling refining margins.

Investors also watched talks to revive the 2015 Iran nuclear deal. More oil could enter the market if Iran and the United States accept an offer from the European Union, which would remove sanctions on Iranian oil exports, analysts said.

Iran responded to the European Union’s “final” draft text to save a 2015 nuclear deal on Monday, an EU official said, but provided no details on Iran’s response to the text. The Iranian foreign minister called on the United States to show flexibility to resolve three remaining issues.

In the United States, total output in the major US shale oil basins will rise to 9.049 million bpd in September, the highest since March 2020, the US Energy Information Administration (EIA) said in its productivity report on Monday.

Market participants awaited industry data on US crude stockpiles due later on Tuesday. Oil and gasoline stockpiles likely fell last week, while distillate inventories rose.

The premium for front-month WTI futures over barrels loading in six months stood at $3.46 a barrel on Tuesday, the lowest level in four months, suggesting easing tightness in prompt supplies.

Published on

August 16, 2022

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