By Trixie Yap
SINGAPORE (Reuters) -Oil prices eased on Thursday as worries over demand due to a seasonal slowdown during winter and an uncertain economic outlook for China outweighed expectations of tighter supplies from extended production cuts in Saudi Arabia and Russia.
futures fell 24 cents to $90.36 a barrel by 0412 GMT, after a nine-session winning streak. U.S. West Texas Intermediate crude (WTI) futures fell 29 cents to $87.25 after a seven-session gain.
Both benchmarks had spiked earlier in the week after Saudi Arabia and Russia, the world’s top two oil exporters, extended voluntary supply cuts to the year-end. These were on top of the April cuts agreed by several OPEC+ producers running to the end of 2024.
“At present, it is really difficult for us to see any negative factors due to supply constraints. However, we need to consider possible demand risks such as in the fourth quarter, the market could slow into an off peak season for oil consumption after summer demand ends,” said CMC Markets (LON:)’ Shanghai-based analyst Leon Li.
Mixed data sets from China, with overall exports falling 8.8% in August year-on-year and imports contracting 7.3%, but crude imports surging 30.9% year on year, also impacted prices.
The weakness of China data is slowing, with trade data showing slower declines compared with market polls, and the Chinese government has also introduced a series of policy boosters in the financial and real estate markets, Li said.
However, it is still too early to judge the pace of China’s demand recovery now, although it is still expected to be better than July, he added.
Concerns on rising oil output from Iran and Venezuela, which could balance out a portion on cuts from Saudi and Russia, kept a lid on the market as well.
“OPEC+ action is being partially undermined by the return of sanctioned barrels from Iran. Iranian crude production has ranged higher in the year-to-date, reaching 2.83 million barrels per day (bpd) in July, up from 2.55 million bpd in January,” said BMI research analysts in a report.
“We also note upside risk to our Venezuelan production forecast, with U.S. officials reportedly drafting proposals to ease sanctions if Caracas progresses plans to hold new presidential elections,” they added.
On the supportive front, {{8849|U.S. crcrude oil inventories were projected to have fallen by 5.5 million barrels in the week ending Sept. 1, according to market sources citing American Petroleum Institute figures. [API/S]
Official inventory data from the U.S. Energy Information Administration is due at 11 a.m. EDT (1500 GMT) on Thursday.
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