In Thursday’s Asian trading, oil prices saw an increase due to a prolonged reduction in U.S. oil inventories, which has sparked optimism regarding sustained demand from the world’s largest fuel consumer. This rise follows a bounce from recent multi-month lows, driven by favorable buying conditions.
Brent crude futures climbed 0.3% to $78.59 per barrel, while West Texas Intermediate futures gained 0.4% to $77.98 per barrel. This uptick comes after significant declines in recent sessions, influenced by concerns about a potential U.S. recession affecting oil demand.
The U.S. saw a substantial drop in oil inventories by 3.7 million barrels for the week ending August 2, marking the sixth consecutive month of reduction and exceeding expectations of a 1.6 million-barrel decrease. This trend has led to hopes that the U.S. oil market may tighten, particularly with increased demand during the summer travel season.
Despite this, rising stocks of gasoline and distillates suggest that fuel demand could slow post-summer. The Energy Information Administration also reported a record-high U.S. oil production level of 13.4 million barrels per day last week and adjusted its global demand growth forecast to slower rates than previously estimated.
Meanwhile, China’s oil imports fell by 12% in July compared to June and 3% year-over-year. This drop is linked to weakening fuel demand and lower refining margins, following a series of disappointing economic indicators that heightened concerns about slower growth in the top oil-importing nation.
The mixed market signals from both the U.S. and China have impacted oil prices, with traders adding a small risk premium despite potential Middle Eastern geopolitical tensions, particularly between Israel and Iran.