The front-month ICE Brent contract lost $1.36/bbl on the day, to trade at $84.82/bbl at 09.00 GMT, reports Engine.
Upward pressure
The American Petroleum Institute (API) data cited by Trading Economics showed a decline of about 6.20 million bbls in US crude oil stocks in the week that ended 11 August, helping Brent futures to gain some upward support.
The Price Futures Group’s market analyst Phil Flynn expected a decline of 3 million bbls, he said in a note. Oil investors are now waiting for the broadly followed US government data on crude oil stockpiles from the US Energy Information Administration (EIA).
Additionally, the US Strategic Petroleum Reserves (SPR) plunged below 350 million bbls in the week to 4 August, according to EIA. This is the lowest level since August 1983. Travel during the summer season in the US is expected to drive oil demand in the world’s largest consumer, the EIA said.
Downward pressure
Brent futures came under pressure due to concerns about a slow pace of economic recovery in China against the backdrop of consecutive COVID-19 outbreaks.
“China concerns and a stronger USD ensured some downward pressure not just for oil, but the broader commodities complex,” said ING’s head of commodities strategy Warren Patterson.
Moreover, oil traders are anxious about more aggressive monetary tightening by the US Federal Reserve (Fed) when they convene for the next policy meeting in September. “The [Chinese] concerns were exacerbated by resurfacing anxieties about a more aggressive stance from the US Federal Reserve, causing a wholesale lack of interest in high-risk assets [commodities like crude oil],” said SPI Asset Management’s analyst Stephen Innes.
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Source: ENGINE
