Oil Holds In Tight Range As US Stockpiles, China Set The Tone

(Bloomberg) -- Oil edged higher for a third session, while keeping within a narrow range, as traders assessed lower US stockpiles and weakness in Chinese demand.

Brent rose to trade above $82 a barrel, leaving prices little changed for the week, while West Texas Intermediate was near $78. Data this week showed a fourth drop in US inventories, which have drawn down to the lowest since February. Timespreads continue to point to tight near-term conditions.

Still, there are concerns about energy consumption in China, the world’s largest oil importer. A slowdown in growth, a lack of major stimulus initiatives, and higher electric-vehicle usage are crimping demand expectations.

Crude remains modestly higher year-to-date, helped by supply cutbacks from OPEC+ and expectations for lower US interest rates. Market watchers, however, are now split over whether the producer cartel will ease their curbs next quarter, with an online monitoring meeting due on Aug. 1.

“Prices have remained range-bound for many months,” said Stefano Grasso, senior portfolio manager of Singapore-based fund 8vantedge Pte. While It is difficult for oil to drop below $70 due to OPEC’s influence, as well as ongoing conflicts in major producing regions, OPEC’s spare capacity acts as a cap, he said.

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