Oil down over fears on low global demand after weak Chinese import data

Oil prices continued their decline on Wednesday as bearish Chinese trade data cast doubt on demand amid warnings from the World Bank over global financial risks, while positive US inventory data aided price upswings.

International benchmark Brent crude traded at $75.73 per barrel at 10.25 a.m. local time (0725 GMT), a 0.73% loss from the closing price of $76.29 a barrel in the previous trading session on Friday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $71.17 per barrel, down 0.79% from the previous session’s close of $71.74 per barrel.

Data from China’s Customs Bureau showed declining imports in the world’s largest oil-importing country, raising doubts over its demand outlook.

Imports in the world’s second-largest economy contracted 4.5%, slower than an expected 8% decline and April’s 7.9% fall.

This came as the World Bank said Tuesday that global growth has slowed sharply and the risk of financial stress in emerging market and developing economies (EMDEs) is intensifying due to high interest rates.

Dollar-indexed oil prices came under further pressure from the rising value of the greenback.

The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, rose 0.17% to 104.2 early Friday.

-Eyes on US-Saudi meeting

Prices also received upward support late Tuesday when the American Petroleum Institute (API) announced an estimated decrease of 1.7 million barrels in US crude oil inventories, more than the market expectation of a 1.5-million rise.

A strong inventory decrease implies an uptick in crude demand in the US, easing market worries over falling demand.

The US Energy Information Administration’s (EIA) data on oil stocks will be announced later on Wednesday, and if the increase in stock levels is confirmed, prices are expected to decline.

Meanwhile, US Secretary of State Anthony Blinken arrived Tuesday in Saudi Arabia for a three-day visit.

The top US diplomat’s visit comes days after Riyadh pledged to further cut oil production.

On Sunday, the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to not only maintain this year’s output limits but further extend them until December 2024.

The group’s swing producer, Saudi Arabia, surprised markets with an additional voluntary production cut of around 1 million bpd in July. The country said its one-month output reduction could also be extended.

The OPEC+ group’s announcement came following its decision in April to implement a collective output cut of around 1.6 million bpd on top of its cut of around 2 million bpd in October of last year.

• Organization of Petroleum Exporting Countries (OPEC)