Oil prices traded higher on Thursday as the latest inventory data from the Energy Information Administration (EIA) pointed towards tightening supplies in the US.
Brent crude oil futures expiring in October gained 0.13% to $78.43 per barrel, while the US West Texas Intermediate crude futures added 0.29% to $75.45 per barrel. Discount buying also supported the two benchmarks as they bounced back from multi-month declines in the previous session.
However, the recovery seemed to have started easing, and additional increases in oil prices have been hindered by China’s crude imports falling to their lowest level since September 2022 in July.
Data from the General Administration of Customs China (GACC) showed on Wednesday that the world’s largest oil importer brought in 9.97 million barrels per day (bpd) last month, dropping 12% drop from and 3% from the same period in the year earlier.
Imports for the seven-month period were at 10.89 million bpd, also falling 2.4% from the year ago. The weak import data came as processing margins and fuel demand tumbled to limit operations of state-run and independent refineries.
The report followed a series of lackluster economic data from the country, which further fueled concerns over sluggish activity in the world’s second-largest economy.
Uncertainty in China’s economy and prospects of a US recession have mostly weighed on oil prices in recent sessions, while risk premium was low due to potential disruptions from fears of an all-out war in the oil-rich region of the Middle East.
US Crude Inventories Drop, Fuel Stocks Rise as Demand Eases
In a sign of continued stability in US oil demand, the EIA reported on Wednesday that oil inventories in the top consumer fell 3.7 million barrels to 429.3 million barrels in the week ending August 2, marking its sixth consecutive month of decline and surpassing forecasts of a 1.6 million barrel draw.
The slump reinforced views of shrinking supplies in the country, and that demand remained above supply, especially as the travel-heavy summer season increased the need for fuel in the last two months.
Still, gasoline and distillate stocks rose 1.3 million to 225.1 million barrels and 900,000 barrels to 127.8 million barrels in the week, respectively, presenting the possible start of fuel demand easing following significant consumptions in the summer.
The EIA said US oil output climbed to a new record high of 13.4 million bpd the week prior, and they expect oil demand growth worldwide to lose more momentum than initially anticipated.
