By Adedapo Adesanya
The oil market finished lower on Wednesday as investors took profits following earlier gains on tighter US crude supplies and China’s pledge to reinvigorate its economic growth.
Brent was down by 17 cents to close at $79.46 a barrel as the US West Texas Intermediate (WTI) fell by 40 cents to $75.35 a barrel.
Earlier, prices moved higher after the US Energy Information Administration (EIA) reported an inventory dip of 700,000 barrels for the week ending July 14, falling to 457.4 million barrels—a figure that is 1 per cent above the five-year average for this time of year compared with an inventory build of 5.9 million barrels for the previous week.
The data showed inventories in the Strategic Petroleum Reserve (SPR) climbed for the first time since January 2021 as the US tries to refill the reserve following last year’s record drawdown.
This came after the American Petroleum Institute (API) reported on Tuesday similar crude oil inventory figures this week, estimating a 797,000 barrel draw for the last week, sending prices slightly higher.
Market participants took advantage of the higher prices and took profits.
Strength in the US dollar index (.DXY) also weighed on prices. A stronger greenback makes crude more expensive for investors holding other currencies.
China’s top economic planner pledged on Tuesday to roll out policies to “restore and expand” consumption in the world’s second-largest economy.
This measure that could boost oil demand in the world’s largest oil importer.
The National Development and Reform Commission (NDRC) said persistent economic recovery faces difficulties and challenges of “insufficient demand, weak momentum and weak confidence, assuring that it would roll out policies to “restore and expand” consumption without delay as consumers’ purchasing power remained weak, suggesting an urgency to revive domestic demand.
Data on retail sales in the US rose less than expected in June and boosted views that the Federal Reserve will stop raising interest rates. Higher rates increase borrowing costs and can slow economic growth and reduce oil demand.
In another positive sign, a European Central Bank governing council member, Klaas, suggested that rate hikes beyond the ECB’s meeting next week were “by no means a certainty.”
Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the country’s energy ministry.
