On Wednesday, oil prices dipped, giving up some of their previous gains, as China and Japan published dismal economic data, escalating fears about growth and oil demand in the world’s two largest users of the commodity.
Crude oil futures in London declined 34 cents, or 0.3 percent, to $104.30 a barrel as of 0501 GMT, while West Texas Intermediaten(WTI) crude futures in the United States slid 46 cents (0.5 percent) to $100.14 a barrel at the same time. Prior to that, both futures had gained more than 6 percent in the previous trading session.
Despite tight steps to contain the spread of the COVID virus, China’s crude oil imports fell by 14 percent from a year earlier, continuing a two-month decline. The world’s top crude importer was hit by the virus because of the strict restrictions.
According to figures released on Wednesday by the General Administration of Customs, the world’s biggest crude oil consumer imported 42.71 million tonnes of crude oil last month, which is equal to 10.06 million barrels per day.
Oil prices rose on Tuesday, boosted by news of a temporary relaxation of parts of China’s stringent COVID-19 restrictions, which fueled optimistic optimism among traders.
The Asian market, on the other hand, is less optimistic about China’s COVID scenario than the rest of the world, according to OANDA senior market analyst Jeffrey Halley.
The Chinese city of Shanghai issued a warning on Wednesday that anyone who violates the city’s strict COVID-19 lockdown rules will be dealt with harshly, while also rallying residents to defend their city as the number of new cases climbed to more than 25,000 for the first time in more than two years.
In a study released on Wednesday, Japan revealed that core equipment orders fell by the most in almost two years in February, with a significant reduction in demand from IT and other service sectors contributing to this decline.
Although Russian oil and gas condensate output is declining, oil prices are being supported by this trend, and OPEC has warned that it would be hard to replace any prospective supply losses from Russia.
On Tuesday, Russian President Vladimir Putin criticised Ukraine for derailing peace negotiations, and he vowed that Moscow would not back down from what he described as a “special operation” to disarm the country’s western border.
According to Halley, “statements from Vladimir Putin indicating that negotiations with Ukraine have come to a stalemate, as well as comments from President Biden accusing Russia of genocide, are reinforcing the fact that the Ukraine-Russia situation will not deescalate anytime soon – another reason to expect that the downside for oil prices is limited.”
According to market sources quoting American Petroleum Institute numbers released on Tuesday, crude stockpiles increased significantly last week, while distillate and gasoline inventories decreased.
The 7.8 million barrel increase in oil stockpiles announced by the American Petroleum Institute for the week ending April 8 is more than the 900,000 barrel increase predicted in a Reuters poll.