Oil prices fell in Friday trade in Asia and were poised for a second straight weekly decline as concerns about demand more than offset falling U.S. crude inventories and rising odds of a September interest rate cut from the Fed.
Early on Friday, the U.S. benchmark, WTI Crude, was down by 0.6% and traded at around $82.30, while Brent Crude, the international benchmark, fell by 0.56% to $84.63. Both benchmarks were on track to post a weekly decline of about 0.3%.
Prices rose on Wednesday and early on Thursday, pushed up by a larger-than-expected U.S. crude inventory draw the EIA reported on Wednesday morning.
The EIA’s weekly inventory report showed an inventory draw of 4.9 million barrels of commercial crude stocks for the week to July 12—larger than expected.
The effect of the drop in U.S. crude stocks faded after a day as China’s leadership party plenum failed to convince markets that the authorities will be employing major stimulus measures to revive the economy, which grew at a slower pace than expected in the second quarter.
The Communist Party’s Central Committee meeting this week appeared not to address pressing economic issues, and its final press release was vague and clichéd, observers told VOA.
“It does not make macroeconomic adjustments at all but is like a philosophical article, which is basically a cliché,” Shi He-ling, an associate professor of economics at Monash Business School at Monash University in Caulfield, Australia, told VOA.
Oil prices have been pressured down by concerns about China’s oil demand and the trajectory of its economic growth.
“The impact of Wednesday’s surprise data showing a weekly plunge in US crude inventory has faded and attention has snapped back to signs of tepid oil appetite across the globe and especially in Asia, which dominates demand growth,” Vanda Insights said early on Friday.
Capping oil price losses this week were the words of Fed Chair Jerome Powell that recent inflation data “add somewhat to confidence” that policymakers have made good progress on curbing inflation. The remarks have given hope to the market that a September cut is coming.
Wildfires in Canada threatening oil sands production also acted as a firmer floor under prices. This week, MEG Energy proactively began to evacuate non-essential personnel from it Christina Lake Regional Project (CLRP) as a result of nearby wildfires.
By Tsvetana Paraskova for Oilprice.com
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