NEW YORK: Oil futures edged lower on Tuesday as weaker-than-expected economic data in China offset a forecast of higher global demand from the International Energy Agency (IEA).
Brent crude futures dropped 15 cents to $75.08 a barrel by 10:48 a.m. EDT (1448 GMT), while U.S. West Texas Intermediate crude edged down 13 cents to $70.98.
Both benchmarks rose more than 1% on Monday, reversing a three-session losing streak.
Oil prices rise as tight supplies compete with economic concerns
Weighing on prices Tuesday, data from China showed that industrial output and retail sales growth undershot forecasts in April, suggesting the world’s No.2 economy lost momentum at the start of the second quarter.
However, an 18.9% year-on-year rise in China’s oil refinery throughput in April to the second-highest on record helped to keep a floor under crude prices.
“There has been a lot of concern about China’s industrial numbers, but if you look at their actual demand numbers or refinery runs, they’re knocking on the door of breaking records,” said Phil Flynn, an analyst at Price Futures Group.
With refiners building stockpiles ahead of the summer travel season in the northern hemisphere, crude imports by China in May are moving towards 11 million barrels per day, versus 10.67 million bpd in April, Refinitiv Oil Research said.
China’s June refinery intake is expected to grow by 1.5% month on month, data compiled from Wood Mackenzie showed.
The IEA raised its forecast for global oil demand this year by 200,000 bpd to a record 102 million bpd. It said China’s recovery after the lifting of COVID-19 curbs had surpassed expectations, with demand reaching a record 16 million bpd in March.
In another bullish factor, the U.S. Department of Energy, on Monday said it would buy 3 million barrels of crude oil for delivery in August in a move to begin refilling the Strategic Petroleum Reserve.
The SPR has drawn down to its lowest since 1983 after the Biden administration last year conducted the largest ever sale from the emergency stockpile of 180 million barrels, part of a strategy to stabilize soaring oil markets and combat high pump prices in the aftermath of Russia’s invasion of Ukraine.
Meanwhile, U.S. commercial crude stocks fell by about 1.3 million barrels last week, according to analysts polled by Reuters. Investors are awaiting weekly industry inventory data after the market closes, followed by a government report on Wednesday.
Also on the supply side in North America, widespread blazes in Alberta, Canada, shuttered at least 319,000 barrels of oil equivalent per day, representing 3.7% of national production.
Global crude supplies could also tighten in the second half as the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, implement additional output cuts.
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