Sibel Morrow
08 August 2023•Update: 08 August 2023
ANKARA
Oil prices slumped on Tuesday over demand uncertainties in the world’s largest oil importer, China, ahead of incoming US inflation data, which is expected to hint at the US Federal Reserve's next interest rate move on Thursday.
International benchmark Brent crude traded at $84.64 per barrel at 10.64 a.m. local time (0764 GMT), a 0.82% loss from the closing price on Friday of $85.34 per barrel.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $81.24 per barrel, down 0.85% from the session close of $81.94 per barrel on Friday.
According to customs figures released on Tuesday, China's crude oil imports declined 18.8% month on month in July to around 10.29 million barrels per day (bpd), suggesting a demand weakness that put downward pressure on oil prices.
Further disappointing investors, China reported a 12.4% decline in imports and a 14.5% fall in exports in July compared to the same month last year.
However, supply cuts by Saudi Arabia and Russia continue to support upward oil price movements.
Earlier this month, Saudi Arabia stated that it would extend its existing 1 million bpd output cutbacks through September. The country originally reduced output in July and extended it through August.
Likewise, Russia announced it would continue to voluntarily reduce oil exports. It said it would reduce exports by 500,000 bpd in August and cut 300,000 bpd in September.
Investors are closely following data from major economies, notably the US, ahead of a highly anticipated US inflation report due later this week, which is expected to provide signals about the Fed's next monetary policy decision.
Fed Governor Michelle Bowman warned on Monday of the necessity of multiple rate hikes to get inflation back to healthy levels.
The American Petroleum Institute (API) will issue forecasts of the newest data on the country's crude oil stockpiles later on Tuesday, while the US Energy Information Administration (EIA) will reveal the actual data on Wednesday.
The decline in crude oil stocks indicates improved demand in the US, which should push prices higher, whereas expanding stockpiles tend to force prices down.
