On Wednesday, oil prices went down amid slower demand growth in China and concerns about the volume of cuts in lending rates.
West Texas Intermediate crude oil futures for August delivery dropped by -0.04% to $71.16 per barrel on June 21. Likewise, Brent oil contracts fell by -0.09% to $75.83 per barrel.
Traders noted that crude supplies from Iran and Russia got higher in recent weeks, another bearish market factor.
According to experts, energy traders are witnessing weakness in oil on disappointing efforts. They added that dealers need to see a more robust economic rebound in the Asian country for an improved outlook.
Also, they mentioned that its crude demand would lessen since substantial interest in electric vehicles negatively affects fuel use.
Furthermore, lower rates were after the Chinese economic data that showed its retail and factory sectors. It showed the sectors’ struggles in maintaining momentum from the start of the year.
Beijing’s oil imports dropped in May after experiencing a decade high in April. On the other hand, the price drop for the commodity would be limited due to expectations for demand growth.
Additionally, usage in China and India is anticipated to grow in the following months despite the low demand forecast. Besides, the rising aviation sector in India can help boost demand.
Chinese Economic Data Lowers Oil
Economic uncertainty in China offset the effects of output cuts reported by OPEC+ and allies. Benchmark cuts clouded the demand and growth guidance of the crude oil importer.
Many large banks have slashed their 2023 Chinese gross domestic product growth forecasts. This is after May data reported the post-COVID recovery was fading.
The Asian nation was expected to cut loan rates in June after a decrease in medium-term policy loans. It was an effort to fortify a shaky recovery in its economy.
Moreover, higher exports in Iran put pressure on oil prices. Despite US sanctions, its crude exports and output reached high records in 2023. According to experts, it added to global supply as other producers were declining outputs.
