Oil prices fell as global commodity and stock markets fell, as concerns about a slowdown in China's economy overshadowed the impact of a drop in U.S. inventories.
Brent crude fell to $81 a barrel after rising 0.9% on Wednesday, while West Texas Intermediate crude held near $77. Despite Beijing’s key interest rate cut on Thursday, concerns about the impact of a slowing economy on oil demand persist. Stocks and commodities, including copper, also fell.
Crude oil prices have fallen after hitting a record high earlier this month, weighed down by concerns over weak demand prospects in Asia's largest economy, which contrasts with the positive impact of OPEC+ production cuts and expectations of interest rate cuts in the United States.
Overall, financial markets have been down in recent hours, including the tech-heavy Nasdaq 100.
Negative effects on oil prices
“Given the recent correction in the Nasdaq and some disappointing earnings reports, there seems to be a lot of risk aversion, which is weighing on oil prices,” said Tai Hui, head of Asia market strategy at JPMorgan Asset Management in Hong Kong. Weaker-than-expected economic data, including from China, is also weighing on demand expectations, he added.
China, which imports supplies from around the world including Russia, the Middle East and the Americas, saw its crude oil imports fall by 2.3% in the first half of this year compared to the same period in 2023.
The spread between futures contracts has also narrowed in recent sessions, suggesting less supply. The spread between the two nearest Brent contracts was 90 cents a barrel in backwardation, compared with $1.18 a week ago.
On Wednesday, the United States reported that commercial oil inventories fell by 3.74 million barrels, the fourth straight weekly decline, with gasoline and distillate stocks also shrinking.
