ANKARA: Oil prices declined on Wednesday over demand fears in China as data signaled a persistent economic contraction, while evolving tension in the Red Sea driven by the Israel-Palestine war continues to prop up prices.
The international benchmark crude Brent traded at $82.12 per barrel at 10.06 a.m. local time (0706GMT), a 0.46% decrease from the closing price of $82.50 a barrel in the previous trading session on Tuesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $77.50 per barrel, down 0.42% from Tuesday’s close of $77.82 per barrel.
Weak economic data from China, the world’s largest crude oil importer, spurred demand concerns despite the government’s efforts to revive several sectors, including the property sector.
According to data released by the China National Bureau of Statistics, the Manufacturing Purchasing Managers’ Index (PMI) registered at 49.2 in January, below the growth threshold of 50 points and indicating the continuation of the previous quarter’s
economic contraction.
The weak data comes in the wake of the liquidation decision over the debt-ridden real estate company Evergrande. Experts concur that the steps taken by the Beijing administration in recent weeks have been necessary for the country’s economy to enter the expected growth trend.
Meanwhile, ongoing tensions in the Red Sea following the Israel-Palestine war continue to support price gains.
The Houthi group in Yemen claimed to have received a threat from the US via Amman, warning it that it would open fronts against it in retaliation for its operations against Israel.
“The American threatening message is in response to the Yemeni people’s rejection of the killing of people in Gaza,” Muhammad Ali Al-Houthi, a member of the group’s Supreme Political Council, said in a statement on X.
“We say to the US that any folly in carrying out the American threat will fail and will not stop the Yemeni people from their mission to support Gaza,” he added.
Iran, in response to the US blaming Iran-backe
d groups for the recent attack on an American base on the Syria-Jordan border, announced that it “will respond decisively to any attacks targeting its territory, interests, or citizens.”
Positive Data on US Oil Demand
Data signaling strong demand in the US, the world’s largest oil consumer, limited further price declines.
According to data from the American Petroleum Institute (API), crude oil inventories in the country decreased by 2.5 million barrels, significantly more than the market expectation of a fall of 867,000 barrels. The official stock data from the US Energy Information Administration (EIA) will be released later on Wednesday, and if the data confirms the stock drawdown, price increases are expected.
Market players are awaiting decisions from the first US Federal Reserve (Fed) Open Market Committee (FOMC) meeting of the year to be held later Wednesday, although investors anticipate that the bank will keep its interest rate steady.
While uncertainties continue regarding when the Fed will init
iate its first rate cut, analysts anticipate that more clues will be given about the future of the Fed’s monetary policy in the minutes of the meeting and in Fed Chairman Powell’s statements.
Source: Anadolu Agency