Oil prices settle lower on US supply, lower China demand

OIL prices settled lower on Tuesday on fears of higher US supply combined with an economic slowdown and lower Chinese fuel demand.

Brent crude futures settled down US$1.59, or 1.7 per cent, to US$90.03 per barrel, while US West Texas Intermediate (WTI) crude settled down US$2.64, or 3.1 per cent, to US$82.82 per barrel.

China, the world’s top crude oil importer, indefinitely delayed release of economic indicators originally scheduled to be published on Tuesday, indicating to the market that fuel demand is significantly depressed in the region.

“It’s not a good sign when China decides not to publish economic figures,” said John Kilduff, partner at Again Capital LLC in New York.

China’s adherence to its zero-Covid policy has continued to increase uncertainties about the country’s economic growth, CMC Markets analyst Tina Teng said.

Oil prices were also pressured by reports that the US government would continue releasing crude oil from reserves.

The Biden administration plans to sell oil from the Strategic Petroleum Reserve in an effort to cool fuel prices before next month’s congressional elections, sources told Reuters on Monday.

In addition, US crude oil stocks were expected to have risen for a second consecutive week, a preliminary Reuters poll showed on Monday.

Output in the Permian Basin of Texas and New Mexico, the biggest US shale oil basin, is forecast to rise by about 50,000 barrels per day (bpd) to a record 5.453 million bpd this month, the Energy Information Administration said.

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Investors had been increasing long positions in futures after Opec+ agreed to lower output by 2 million barrels per day, ANZ Research analysts said in a note.

Several members of the oil producer group have endorsed the cut after the White House accused Saudi Arabia of coercing some nations into supporting the move, a charge Riyadh denies. REUTERS