Oil prices experienced a slight increase in Asian trade on Tuesday as investors anticipated a potential tightening of U.S. crude supplies. This comes after prices sank in the previous session due to weaker-than-expected Chinese economic growth. Brent crude rose by 26 cents to reach $78.67 a barrel by 0450 GMT, while U.S. West Texas Intermediate crude increased by 29 cents, reaching $74.44 a barrel. Both contracts had declined by over 1.5% on Monday.
Market participants are eagerly awaiting industry data set to be released later on Tuesday, which is expected to reveal a decrease in U.S. crude oil stockpiles and product inventories from the previous week. According to a Reuters poll of four analysts, it is estimated that U.S. crude inventories fell by an average of approximately 2.3 million barrels in the week ending July 14.
The release of lackluster gross domestic product (GDP) data from China on Monday has resulted in cautious sentiment regarding oil prices and their demand recovery. Analysts had anticipated a 7.3% year-on-year GDP growth for China in the second quarter; however, the actual figure stood at 6.3%, indicating a loss of momentum in the country’s post-pandemic recovery.
Jun Rong Yeap, a market strategist at IG in Singapore, stated that the disappointing GDP data from China has kept prices in check, as concerns linger regarding the pace of demand recovery.
The upcoming release of U.S. crude stockpile data will provide further insights into supply levels and potentially influence market sentiment. Any significant deviations from the estimated decline in inventories could impact oil prices accordingly.
Investors continue to monitor global economic indicators and developments in oil-producing regions to gauge the overall demand and supply dynamics. Factors such as geopolitical tensions, OPEC+ decisions, and the progress of COVID-19 vaccination campaigns worldwide also contribute to the volatility of oil prices.
As the energy market remains sensitive to various factors, market participants will closely analyze the forthcoming data and adjust their positions accordingly. The reaction to the U.S. crude stockpile data, coupled with ongoing economic indicators, will likely shape the short-term direction of oil prices.
