LONDON: Oil prices were little changed on Tuesday as investors remained focused on the likelihood of China’s economic malaise hobbling demand from the world’s top crude importer.
Brent crude was down 26 cents at $84.20 a barrel by 1300 GMT and the more active U.S. West Texas Intermediate October contract slipped 24 cents to $79.88.
The front-month WTI contract was down 10 cents at $80.62 a barrel on very limited trading volume ahead of its imminent expiry.
China, the world’s second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its sluggish economic activity, however, has frustrated markets as pledged stimulus has falled short of expectations, including a smaller than expected cut in a key lending benchmark on Monday.
“China’s economic weakness … will create a ceiling (for oil prices) this year, especially as Beijing appears committed to avoiding large-scale fiscal stimulus,” Eurasia Group said in a note.
Amplifying demand concerns, U.S. central bank officials have not ruled out further increases to interest rates in its battle to contain inflation.
Meanwhile, the U.S. is expected to continue to draw on its oil stocks. A preliminary Reuters poll showed that crude oil and gasoline inventories were expected to have fallen last week, with data from American Petroleum Institute due later on Tuesday.
An easing of global supply tightness could be on the cards, however. The Iraqi and Turkish oil ministers have discussed the importance of resuming oil flows after finalising pipeline maintenance, the Iraqi state news agency reported on Tuesday.
Turkey had halted Iraq’s 450,000 barrels per day (bpd) of exports - roughly 0.5% of global supply - through the northern Iraq-Turkey pipeline in March after an International Chamber of Commerce arbitration ruling.
But investors are more concerned about Chinese and U.S. interest rates than the Iraq-Turkey talks, said Naeem Aslam of Zaye Capital Markets. “Prices are down on the day, but for other reasons, not Iraq,” Aslam said.
Separately on Monday, Shell said it was investigating a possible leak on the 180,000 bpd Trans Niger oil pipeline, though no force majeure has been declared.
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