Oil futures slumped Tuesday, feeling pressure after another round of disappointing economic data out of China, which was followed by interest rate cuts by the central bank in Beijing.
Price action
- West Texas Intermediate crude for September delivery CL00, -2.46% CL.1, -2.46% CLU23, -2.46% fell $ 1.48, or 1.8%, to $ 81.03 a barrel on the New York Mercantile Exchange.
- October Brent crude BRN00, -2.18% BRNV23, -2.18%, the global benchmark, was down $ 1.32, or 1.5%, at $ 84.89 a barrel on lCE Futures Europe.
- Back on Nymex, September gasoline RBU23, -1.51% was down 0.5% at $ 2.893 a gallon, while September heating oil HOU23, -1.85% declined 1.8% to $ 3.033 a gallon.
- September natural gas NGU23, -4.72% dropped 4.7% to $ 2.663 per million British thermal units.
Market drivers
Data released Tuesday showed China’s retail sales and industrial production grew less than expected in July. The figures followed other lackluster data and comes amid worries over severe distress in the countries property sector, which prompted a series of interest rate cuts by the People’s Bank of China.
Tuesday’s data was “unlikely to help soothe concerns,” said Warren Patterson and Ewa Manthey, commodity strategists at ING, in a note.
But oil-specific data was more encouraging, they said, showing that refiners processed around 14.93 million barrels a day, or mbd, of crude oil in July, up more than 31% year over year and topping the 14.89 mbd processed in June. That appears to be second-highest figure on record after a 14.94 mbd was processed in March, according to ING’s numbers, they said.
WTI hit a 2023 high last week and both it and Brent have scored seven straight weekly gains. Oil has rallied this summer as Saudi Arabia in July implemented a voluntary production cut of 1 million barrels a day — a cut that was recently extended through September. Russia has also moved to extend an additional supply cut of 300,000 barrels a day.
But China data were seen contributing to a retreat from recent highs.
“The oil market might remain tight, but most of the headlines are turning bearish for the demand side. Oil’s pullback might need to continue a while longer before buyers emerge,” said Edward Moya, senior market analyst at Oanda, in a note.
Later Tuesday, the American Petroleum Institute is expected to report weekly crude and petroleum product inventory levels. The Energy Information Administration’s official U.S. inventory figures are set for release Wednesday morning.
Analysts surveyed by S&P Global Commodity Insights, on average, expect crude inventories to show a 2.26 million barrel drop in the week ended Aug. 11. Gasoline stocks are seen down 1.6 million barrels, with distillates mostly unchanged.