Oil Prices Dropped as Demand Concerns Grew

On Friday, crude oil prices fell due to a canceled tighter market in the year’s second half owing to more robust Chinese demand.

West Texas Intermediate crude oil futures for July export went down by -0.88% to $70.00 per barrel. Likewise, Brent oil contracts for August delivery dropped by -0.73% to $75.12 a barrel on June 16’s Asian afternoon session.

According to analysts, concerns about demand keep on taking over the market. They added that the market needs more accurate facts to ensure any small supply.

Moreover, a hike in interest rates could slow economic growth and lessen oil demand. On the other hand, both benchmarks were leading a minor weekly high after declines in the past couple of weeks.

On Thursday, the commodity’s price increased by 3.00% due to higher hopes for stronger Chinese demand. The Asian country’s refinery improved in May, hitting its second-highest total on record. Also, Kuwait Petroleum Corp’s CEO anticipates a growing demand from China in the second half of the period.

As Beijing’s demand rises, the supply will curb. The voluntary crude oil volumes would be cut as implemented in May by OPEC. Also, its allies and Saudi Arabia will have an additional production slash in July.

US Oil Output Expected to Rise

Based on a US Energy Information Administration note, crude oil production in the country would set records. However, they mentioned that the growth is slowing down.

The fluctuation in prices by American producers may mirror a combination of capital usage to heighten dividends. Also, they would repurchase shares rather than invest in another production.

According to the administration, they expect the US oil production to keep growing, driven by Permian Basin’s improvement. This is despite the shift in the price response.

Experts said crude production would hit 12.61 million barrels per day in 2023 and 12.77 million bpd the following year.