Oil prices continued their slide on Wednesday as weak economic data from China stoked concern over fuel demands.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.06 per cent lower at $84.81 a barrel at 6.35pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.21 per cent at $80.82 per barrel.
On Tuesday, Brent settled 1.53 per cent lower at $84.89 a barrel, while WTI fell 1.84 per cent to settle at $80.99.
“Crude prices continue to pull back after disappointing Chinese industrial production data and the German ZEW survey that showed concerns with recovery are elevated,” said Edward Moya, senior market analyst at Oanda.
“The oil market might remain tight, but most of the headlines are turning bearish for the demand side. Oil’s pullback might need to continue a while longer before buyers emerge,” Mr Moya said.
China’s central bank on Tuesday cut key policy rates for the second time since June, in an attempt to revive sagging growth in the world’s second-largest economy.
However, weak economic data for July soured investor sentiment.
China’s industrial output and retail sales grew at a slower pace, compared with June, the National Bureau of Statistics said on Tuesday.
Last week, official data showed that the world’s largest crude importing nation had fallen into deflation, with both consumer and producer prices declining in July compared with a year ago.
Meanwhile, US crude inventories, an indicator of fuel demand, fell by 6.2 million barrels last week, according to the American Petroleum Institute.
The US Energy Information Administration will release its weekly inventory data later today.
Swiss lender UBS on Wednesday raised its oil price forecast for this year after additional supply cuts by Saudi Arabia and Russia.
UBS now expects Brent to trade at $95 a barrel by the end of December, up from its previous estimate of $90 a barrel.
The oil market is projected to be in a deficit of two million barrels per day this month and 1.5 million bpd in September as the two Opec+ members extend their production cuts.
“We don’t expect oil prices to move above $100 a barrel on a sustained basis over the next 12 months, as that would likely lead to strong US supply growth and hurt oil demand growth in 2024,” said Giovanni Staunovo, strategist at UBS.
“We think Saudi Arabia will reduce its voluntary production cut only when it believes the oil market is stable enough to warrant it.”
Earlier this month, the world’s largest oil exporter said it would extend its voluntary oil production cut of one million bpd until September.
The cut, which first took effect in July, could be further "extended and deepened", the Saudi Press Agency reported, citing an official source from the kingdom’s Ministry of Energy.
Russia, which has pledged to lower its oil output by 500,000 bpd until year-end, will cut oil exports by 300,000 bpd next month.