Investing.com– Oil prices crept lower in Asian trade on Wednesday, shrugging off signs of a bigger-than-expected draw in U.S. inventories as concerns over worsening Chinese economic conditions and rising interest rates weighed.
Crude prices fell sharply from 2023 highs in recent sessions as weak economic indicators from top importer China continued to pour in, while signs of a potential resurgence in U.S. inflation boosted the dollar.
While oil prices were still trading relatively higher for the year on the prospect of tighter supplies, their stellar rally over the past two months now appeared to have run out of steam.
fell 0.4% to $84.68 a barrel, while fell 0.3% to $80.75 a barrel by 21:18 ET (01:18 GMT).
U.S. inventories see another big draw- API
Data from the showed that U.S. oil stockpiles saw a much bigger-than-expected 6.2 million barrel draw in the week to August 11.
Analysts were expecting a moderate draw of 2.05 million barrels, after an unexpected build in inventories over prior week. due later on Wednesday is forecast to show a 2 million barrel draw.
U.S. inventories were still nursing a record-high draw from late-July, as the country saw robust summer fuel demand and as global oil supplies tightened.
But higher fuel prices and strong factored into concerns that U.S. inflation will remain sticky in the near-term, potentially keeping the Federal Reserve hawkish for the coming months.
This notion boosted the , which in turn weighed on oil prices, while markets also fretted over higher interest rates potentially denting oil demand later this year.
Tighter oil supplies, especially after bumper supply cuts by Saudi Arabia and Russia, are expected to keep a floor under crude prices for the remainder of 2023. But markets are beginning to doubt the outlook for oil demand amid rising interest rate risks and worsening economic conditions in major importer China.
Chinese fears weigh amid weak data, property market woes
Data on Tuesday showed that Chinese and grew much less than expected in July, capping off a series of weak economic readings for the month.
The world’s largest oil importer sank into disinflation during July, with the government now racing to roll out more economic support as a post-COVID recovery worsens.
While China unexpectedly cut interest rates on Tuesday, markets took little support as fears of a renewed property market meltdown also weighed. Focus is now largely on Country Garden Holdings (HK:)- China’s biggest property developer- as it struggles to meet its debt obligations and avert a potential default.
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