August 23, 2023 [Oil Price]- The American Petroleum Institute (API) has reported a 2.418-million-barrel draw on U.S. crude inventories, compared with the previous week’s 6-million-barrel draw, as oil prices slip on China growth concerns.
Analysts tracked by Investing.com were expecting the Energy Information Administration (EIA) to report an inventory draw of nearly 2.3 million barrels on Wednesday.
Oil prices were slipping slightly on Tuesday ahead of API data, with Brent trading down 0.46% at $84.07 at 3:35 p.m. ET, while WTI was trading down 0.58%, at $80.25 per barrel.
Brent closed the day settling down 43 cents, with WTI’s October contract settling down 48 cents.
Bearish sentiment has risen this week partly on U.S. inventory expectations, but also on U.S. refinery maintenance, which slows refinery demand, and a slowdown in Chinese imports.
Chinese economic data has continued to weigh on oil prices, with Beijing’s rate cut earlier this week failing to ease demand jitters. Additionally, JP Morgan is expecting slowing demand for “mobility fuels” in China. Major banks continue to slash China growth forecasts.
“Saudi and Russian output cuts have been largely negated by weakening crude demand from China that appeared to develop last month and is apt to continue through the rest of the summer,” Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois, was quoted as saying by Reuters.
Last week, the EIA reported an inventory draw of 6 million barrels for the week to August 11, compared to the previous week’s 5.9-million-barrel build, despite the fact that refiners had boosted run rates and exports were soaring, with U.S. oil output at its highest level since COVID.
In other words, the 6-million-barrel draw countered the similar-volume build, lending some bullishness and making this week’s inventory data more poignant.
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