Author: Emily Chow and Trixie Yap
(Reuters) – Oil prices fell on Wednesday as the impact of Hurricane Berrier dissipated and inflation data highlighted continued weakness in consumer demand in top crude importer China.
Futures were down 58 cents, or 0.69%, at $84.08 a barrel by 0632 GMT, after falling 1.3% in the previous session.
U.S. West Texas Intermediate crude oil (WTI) fell 48 cents, or 0.59%, to $80.93 a barrel, after falling 1.1% in the previous session.
Both contracts had fallen about 3% in each of the previous three sessions, amid signs that the Texas energy industry was relatively unscathed after Hurricane Beryl hit the region on Monday.
Oil and gas companies resumed some operations on Tuesday. Some ports have reopened and most producers and facilities are increasing output, but some facilities have suffered damage and power has not yet been fully restored.
Suvro Sarkar, head of the energy sector team at DBS Bank, said: “Hurricane Berrill appears to be the biggest driver at the moment and an opportunity for traders to lock in some profits after the bull run of the past two weeks.”
Concerns about Chinese demand also weighed on prices as consumer prices in the world’s second-largest economy rose for a fifth straight month in June, but less than expected, while producer price deflation persisted.
Independent market analyst Tina Teng said, “Expectations of easing tensions in the Middle East and weaker-than-expected Chinese consumer price index data in June have put pressure on oil prices.”
In the Middle East, talks to secure a ceasefire in the Gaza war will resume in Doha, with intelligence chiefs from Egypt, the United States and Israel in attendance.
However, losses in oil prices were limited by comments from Federal Reserve Chairman Jerome Powell, who said the case for lower interest rates was growing.
Lower interest rates should spur more economic growth and thus oil consumption.
After Powell’s remarks, investors continued to bet that the probability of the Federal Reserve cutting interest rates in September was close to 70%.
“Powell’s speech to the Senate affirmed the improvement in data throughout the June quarter, while insisting that more good data will boost confidence in the outlook for inflation,” ANZ analysts said in a note on Wednesday.
Market sources quoted data from the American Petroleum Institute on Tuesday as saying that oil and gasoline inventories fell by 1.923 million barrels and 2.954 million barrels respectively, indicating stable fuel demand in the summer and promoting a rebound after days of decline. [API/S]
Official data from the U.S. Energy Information Administration will be released at 1630 GMT. [EIA/S]
“Today’s U.S. inventory data will be closely watched if the drawdown continues following last week’s massive drawdown,” DBS’s Sarkar said.
