Jul 19 (Reuters) – Global oil prices fell on Wednesday after opening higher at the start of Asian trading as markets weighed US demand concerns against China’s pledge to boost economic growth, tighter Russian supply and dwindling US supplies.
Brent futures fell 1 cent to $79.62 a barrel at 0615 GMT, while US West Texas Intermediate (WTI) crude fell 15 cents to $75.60 a barrel.
“There are many positive factors for oil prices now in terms of supply and demand, and while we expect WTI to rebound to close to $80 a barrel, this does not mean it is a bull market as the easing stance of the central Banks of the world still represent a retreat from risk.” hunger,” says CMC Markets analyst Leon Li.
“With the Fed likely to raise rates for the last time in July, US demand concerns that will limit oil price increases are likely to persist.”
Economists are still concerned that even with rate hikes, US inflation won’t come down fast enough. A Reuters poll showed that core inflation, which excludes food and energy prices, will be only slightly lower by the end of the year or will remain around current levels of just under 5%.
On a positive note, however, China’s chief economic planner promised on Tuesday it would roll out policies to “restore and expand” consumption in the world’s second-largest economy, which could boost demand for oil as purchasing power of consumers remained weak.
“As long as we assume that China’s stimulus will be successful, oil balances will tighten significantly so far — even if Europe slips into a mild recession,” said Claudio Galimberti, research director for North America at Rystad Energy.
This means prices could still break through the top end of the current market range at $80 a barrel, he added.
On the supply side, Russia will cut its oil exports by 2.1 million tons in the third quarter, in line with planned voluntary export restrictions of 500,000 barrels per day in August, the Energy Ministry said.
Price support also came from an expected fall in US stocks after data from the American Petroleum Institute, an industry group, showed crude, gasoline and distillate inventories all fell last week.
Traders will be looking for confirmation of the stock declines in data from the US government’s Energy Information Administration at 10:30 am EDT (1430 GMT) on Wednesday.
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