By Price Action
- West Texas Intermediate crude for September delivery fell $1.35, or 1.6%, to $80.39 a barrel on the New York Mercantile Exchange.
- October Brent crude, the global benchmark, dropped $1.51, or 1.8%, to $83.83 a barrel on ICE Futures Europe.
Market Drivers
China’s trade data for July raised concerns over oil demand as outbound shipments fell 14.5% from a year earlier, worse than the 12.4% decline in June. Additionally, Chinese imports declined 12.4% from a year earlier in July, compared to a 6.8% fall in June. China’s trade surplus widened to $80.6 billion in July, surpassing the $70.62 billion surplus in June and economist expectations.
Commodities strategists at ING, Ewa Manthey and Warren Patterson, highlighted that oil imports in July experienced a 19% monthly decline to reach 43.7 million tons, equivalent to 10.3 million barrels a day. This decrease in imports was driven by lower domestic demand and increased inventories. However, it is important to note that oil imports are still 17% above the previous year’s low base, which was influenced by COVID outbreaks and extensive lockdowns. In fact, China’s crude imports have risen by 12.5% year over year to 326 million tonnes during the first seven months of 2023.
To compensate for weaker domestic consumption, particularly within industrial demand for diesel, China has significantly increased its exports of refined products. In July alone, exports of refined products rose by an impressive 56% year over year to reach 5.3 million tons.
These trade data figures have put pressure on oil futures as market participants worry about the impact on global oil demand, especially with China being one of the world’s largest consumers of crude oil.
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