On Friday, oil prices slid due to low Chinese demand despite an output cut extension by the Organization of Petroleum Exporting Countries and Allies (OPEC+).
The US West Texas Intermediate (WTI) petroleum futures for April delivery retreated 1.17% to $78.01 per barrel on March 08. Moreover, analysts anticipate a 0.46% tumble to $77.42 a barrel in the coming market session.
China’s oil imports fell 5.94% to 10.80 million barrels per day (bpd) in January-February 2024 from December’s 11.44 million bpd. Nevertheless, the figure indicated a 3.85% year-over-year (YoY) growth from 10.40 million bpd in the first two months of 2023.
The world’s second-largest economy has been struggling, especially with the court-ordered liquidation of Evergrande triggering a property sector crash. Beijing estimated an annual GDP growth of 5.00% this year, which analysts critiqued as impossible without stimulus.
In addition, the Energy Information Administration posted an oil build of 1.37 million barrels in the week ending March 01. It was better than the 2.40-million-barrel market consensus and the 4.20-million-barrel accumulation the previous week.
Similarly, the American Petroleum Institute reported an increase in crude oil inventories of 0.42 million barrels for the same period. The data marked a lower gain than the 2.60-million-barrel forecast and the preceding reading of 8.43 million barrels.
OPEC+ Extends Oil Output Cuts to Second Quarter
On Sunday, OPEC+ members Saudi Arabia and Russia said oil production reductions of 2.20 million bpd will continue into Q2. However, industry watchers noted that the bloc’s yield rose by 0.21 million bpd in February, pointing to member disagreements.
Petroleum prices touched the $80.00 resistance level on March 06 before losing momentum to close at $79.13 per barrel. It prompted OPEC+ to announce its intent to extend its output cuts to prevent prices from falling back down.
Lastly, energy service firm Baker Hughes revealed that the US reduced its active oil rigs by two to 504. Hence, black gold production in the country may slow despite rising domestic gasoline demand ahead of the spring driving season.
