Oil prices edged up on Wednesday after a larger than expected crude stock draw, which offset some concerns around China’s weakened economy seen as potentially hitting demand from the world’s biggest crude importer.
Brent crude futures were up 13 cents, or 0.17 per cent, at $77.33 a barrel by 11:39 a.m. EDT, while US West Texas Intermediate crude futures were flat at $73.17.
Since peaking above $82 on Monday last week, Brent had shed 6.2 per cent of its value by the end of trading on Tuesday, closing at a two-week low of $77.20. WTI fell 7.5 per cent in the same period.
US crude stocks, gasoline and distillate inventories fell in the week ending Aug. 16, the Energy Information Administration (EIA) said on Wednesday.
Crude inventories fell by 4.6 million barrels to 426 million barrels in the week ended Aug. 16, the EIA said, compared with analysts’ expectations in a Reuters poll for a 2.7 million-barrel draw.
Meanwhile, investors’ worries persisted over the prospect of economic weakness in China weighing on the country’s crude demand.
China’s economic struggles have contributed to weak processing margins and low fuel demand that has curbed operations at state-run and independent refineries.
“We are measuring everything right now by the Chinese economy and if anything is leaning negative out of China, it is going to pressure energy,” said Tim Snyder, chief economist at Matador Economics.
Fewer jobs
Also weighing on oil on Wednesday, US employers added far fewer jobs than originally reported in the year through March, the Labor Department said on Wednesday.
The department’s estimate for total payroll employment for the period from April 2023 to March 2024 was lowered by 818,000.
“The sting in the scorpion’s tale that hurts worse than anything is that this data helped create a crisis of confidence,” said Matador Economics’ Snyder.
Elsewhere, a Greek-flagged oil tanker was adrift in the Red Sea on Wednesday after repeated attacks that started a fire on the vessel and caused the ship to lose power, the UK maritime agency said.
Iran-aligned Houthi militants have launched a series of attacks on international shipping near Yemen since last November in solidarity with Palestinians in the war between Israel and Hamas.
The Red Sea leading to the Suez Canal is a key shipping route for oil, and sustained Houthi attacks pose a potential threat to global crude flows.
Meanwhile, US Secretary of State Antony Blinken wrapped up a Middle East trip on which he intended to broker a ceasefire agreement in Gaza.
Blinken and mediators from Egypt and Qatar have raised hopes of a US “bridging proposal” that could shrink the gaps between the two sides in the 10-month war.
“Hopes of a ceasefire between Israel and Hamas have weighed on oil, along with lingering demand concerns,” ING commodities strategists said.