Beijing — Oil prices ticked up in Asian trade on Wednesday, as markets weighed weak demand indicators from top importer China and the prospect of further US rate hikes against potential supply tightness.
Brent crude rose 13c, or 0.2%, to $84.16 a barrel by 3.05am, GMT while US West Texas Intermediate crude was at $79.82 a barrel, up 18c, or 0.2%. Both benchmarks lost about 0.5% on Tuesday.
Markets await hints on the outlook for interest rates when Federal Reserve officials and policymakers from the European Central Bank (ECB), the Bank of England (BoE) and the Bank of Japan (BoJ) head to Jackson Hole, Wyoming, for an annual meeting later this week.
“Investors are reluctant to take big positions ahead of the Jackson Hole symposium as they want to find clues for the next step by the US Federal Reserve,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
“Concerns over higher interest rates and sluggish demand in China are expected to outweigh tightening supply from Opec+ in the short term.”
China, the world’s second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its weak growth has frustrated markets as pledged stimulus has fallen short of expectations, including a smaller-than-expected cut in a key lending benchmark on Monday.
On the supply side, Saudi Arabia has volunteered to cut output by another 1-million barrels a day (bbl/day) from July through September, and Russia plans to reduce exports in August by 500,000bbl/day.
These moves are part of a deal among members of oil cartel Opec and its allies, a grouping know as Opec+, to curb supplies and support prices.
In the US, crude stocks continued to fall, dropping by about 2.4-million barrels in the week ended August 18, according to market sources citing American Petroleum Institute figures on Tuesday. That was a slightly smaller draw than a drop of 2.9-million barrels analysts expected in a Reuters poll.
“Following the massive draw of 6.2-million barrels a week earlier, overall supplies conditions still lean on the tighter end,” said Jun Rong Yeap, a market strategist at IG in Singapore.
The weekly report from the Energy Information Administration, the statistical arm of the US energy department, is due at 2.30pm GMT on Wednesday.
Reuters
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