Oil prices fall on concerns about demand in China, Brent above $81

Oil prices are falling today, driven mainly by concerns about demand in China, the world’s largest oil importer. These concerns outweighed news of a decline in US oil inventories, which had pushed prices higher on Wednesday.

At around 17:00 CEST, North Sea Brent crude was down 0.5 percent, trading at around 81.30 dollars a barrel. US light crude West Texas Intermediate (WTI was down 0.2 percent at the same time, trading at approximately 77.45 USD a barrel.

Oil prices rose on Wednesday after the US government’s Energy Information Administration (EIA) reported that US crude and gasoline inventories fell more than expected last week. Gasoline inventories declined by 5.6 million barrels, while analysts had expected a drop of around 400.000 barrels.

„Despite the decline in US crude and gasoline inventories, investors remained cautious because of weakening demand in China. Expected progress in ceasefire negotiations between Israel and Hamas also added to the pressure,“ Reuters quoted NS Trading president Hirojuki Kikukawa as saying.

Chinese government data showed that the country’s oil imports and refinery operations are lower this year than last. The main reason is weaker demand for fuel amid slow economic growth.

Efforts to reach a ceasefire agreement between Israel and the terrorist group Hamas and end the war in the Gaza Strip have intensified in the Middle East over the past month. A breakthrough in the talks could ease concerns about oil supplies from the region and help bring prices down.

Markets also expect the US Federal Reserve (Fed) to begin cutting interest rates in September. Today’s US data reinforced that view. Lower interest rates should support economic growth, which would increase oil consumption.

Oil prices in dollars per barrel (about 159 litres):