Oil prices were higher in Asian trade on Tuesday as investors observed a significant limitation of U.S. crude supplies. This condition has been created after a decline in the earlier session of Chinese economic growth on the weaker side than predicted.
Talking in terms of numbers then Brent crude was up 10 cents at $78.60 a barrel by 0630 GMT. Whereas, U.S. West Texas Intermediate crude rise up 14 cents to $74.29 a barrel. Also, both contracts were decline more than 1.5% on Monday. On the other hand, market contributors were waiting for industry data. Since it reveals U.S. crude oil inventory along with product inventories that was drop last week.
Four industry experts polled by Reuters estimated that U.S. crude inventories declined by approx 2.3 million barrels. Low gross domestic product (GDP) data from China was declared on Monday. According to Jun Rong Yeap, a market strategist at IG in Singapore, “kept a cautious lid on prices with some reservations in its demand recovery.”
Second Quarter China’s GDP
Apart from this, China’s GDP grew 6.3% year-on-year in the second quarter. As compared with the expert forecast which is 7.3%. Since its post-pandemic recovery got distracted.
Yeap further stated, “Nevertheless, some traction from buyers has emerged lately, with prices breaking above its near-term consolidation pattern last week which may suggest some exhaustion in selling pressure, following the downbeat sentiments over the past year.”
The U.S. Supply and Inventories
In the interim, as per U.S. shale oil production forecasting, there could be a decline of approx 9.40 million barrels per day in August. While this would be the first monthly decline after December 2022. The information was revealed by the Energy Information Administration recently on Monday.
However, global supplies will assume to rise from the resumption of output at two out of three Libyan fields that were shut last week respectively. The output had been paused due to the protest against the abduction of a former finance minister.
“Crude’s price action shows a bullish market outlook on crude oil stockpiles and inventories numbers, traders are keen to observe the impact of the hot temperatures felt in recent weeks on crude supply,” analysts at energy consulting firm Gelber and Associates said in a note.
