Oil Declines As China Concerns Eclipse Draw In US Stockpiles
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(Bloomberg) -- Oil fell, joining a broad retreat in commodities and equity markets, as a soft outlook for China outweighed lower US stockpiles.
Brent dropped toward $81 a barrel after gaining 0.9% on Wednesday, with West Texas Intermediate near $77. While Beijing eased monetary policy on Thursday, there’s underlying concern that its economic slowdown will hamper crude demand. Equities and commodities including copper were also lower.
Crude has been on a decline since a peak at the start of the month amid concern about a soft demand outlook in Asia’s largest economy. Futures remain higher year-to-date, as OPEC+ members maintain their output curbs and expectations build of an imminent cut in US interest rates.
“Given that Chinese recovery is poor, expectations of robust demand are wishful thinking,” said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte in Singapore, adding that there remained uncertainty about potential US rate cuts from the Federal Reserve.
Crude imports by China — which sources supplies from across the globe including Russia, the Middle East, and the Americas — were 2.3% lower in the first half on this year than the same period of 2023.
Timespreads have narrowed in recent sessions, signaling less tight conditions. The gap between Brent’s two nearest contracts was 90 cents a barrel in backwardation, compared with $1.18 a week ago.
On Wednesday, the US reported that commercial crude inventories fell by 3.74 million barrels, down for a fourth week, with stockpiles of gasoline and distillates also shrinking.
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