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Oil prices were little changed on Tuesday after China reported a sharp monthly drop in imports in July, which reinforced demand fears, though that was offset by supply concerns from Saudi Arabian and Russian output cuts.
Oil imports to China, the world’s largest oil importer and second-largest consumer, in July were 43.69 million metric tons, or 10.29 million barrels per day (bpd), data from the General Administration of Customs showed on Tuesday. That was down 18.8 per cent from imports in June though up 17 per cent from a low base a year ago.
China’s falling oil imports occurred amid disappointing economic data for July, with the export-dependent economy reporting outbound shipments fell by 14.5 per cent, the biggest decline since February 2020 and higher than analysts’ expectations.
Brent crude futures were at $85.38 a barrel, up 4 cents, or 0.05 per cent, at 0411 GMT, while U.S. West Texas Intermediate crude was at $82.02 a barrel, up by 8 cents, or 0.1 per cent.
Both contracts settled around 1 per cent lower in the previous session as investors braced for weaker demand from China and the United States, the world’s two biggest oil consumers and economies.
“Crude oil’s rally took a breather, facing key technical resistance… But Saudi and Russia’s production cut could remain a bullish factor to oil markets,” said CMC Markets analyst Tina Teng in a note.
Saudi Arabia, the world’s top exporter, earlier said it would extend a voluntary oil output cut of 1 million bpd for another month to include September, adding that it could extend the cut beyond that date or make a deeper cut to production after September.
Russia also said it would cut oil exports by 300,000 bpd in September.
“Saudi Arabia’s decision to extend production cuts into September despite Brent futures rising above $80 per barrel suggests that the kingdom may be targeting a higher price than $80,” said Vivek Dhar, mining and energy commodities strategist at Commonwealth Bank of Australia.
Markets are also awaiting U.S. oil and fuel products inventory data. A Reuters poll on Monday night showed forecasts for a 200,000-barrel drawdown in crude inventories and a rise in gasoline stocks of 200,000 barrels.
