Oil prices slipped on Tuesday after data showed China’s imports and exports fell much more than expected in July in a further sign of weak growth in the world’s largest oil importer, although losses were limited by expected supply tightness.
Brent crude futures were at $85.05 a barrel, down by 29 cents, or 0.34%, at 0641 GMT, while U.S. West Texas Intermediate crude was at $81.69 a barrel, down by 25 cents, or 0.31%.
Oil imports to China in July were 43.69 million metric tons, or 10.29 million barrels per day (bpd), data from the General Administration of Customs showed on Tuesday. That was down 18.8%from imports in June, but still up 17% from a year ago.
At the same time, China’s overall imports dropped 12.4% and exports fell 14.5% from a year earlier. The pace of export decline was the fastest since February 2020 and worse than analysts’ expectations.
Despite the gloomy data, some analysts were still positive on China’s fuel demand outlook for August to early October as crude processing rates remained high.
It is the peak season for construction and manufacturing activities starting September and gasoline consumption should benefit from summer travel demand, said CMC Markets analyst Leon Li. Demand is expected to gradually decrease after October, he added.
On the supply side, Saudi Arabia, the world’s top exporter, has said it would extend a voluntary oil output cut of 1 million bpd for another month to include September, adding that it could extend the cut beyond that date or make a deeper cut to production after September.
Russia also said it would cut oil exports by 300,000 bpd in September.
“Saudi Arabia’s decision to extend production cuts into September despite Brent futures rising above $80 per barrel suggests that the kingdom may be targeting a higher price than $80,” said Vivek Dhar, mining and energy commodities strategist at Commonwealth Bank of Australia.
Investors are also awaiting U.S. oil and fuel products inventory data. A Reuters poll on Monday showed forecasts for a 200,000-barrel drawdown in crude inventories and a rise in gasoline stocks of 200,000 barrels.