Oil prices fell on Wednesday on future demand concerns after data showed that China’s first-half crude imports dropped, but were still holding near a one-week high amid concerns about supplies as the world recovers from the coronavirus pandemic.
Crude imports in China, the world’s top oil importer, reportedly dropped by 3% from January to June 2021 year-on-year. Import quota shortages, refinery maintenance and rising global prices led to reduced purchases that resulted in the first such contraction since 2013.
“Imports were scaled back as surging prices for crude oil have eroded refinery profit margins… if OPEC+ doesn’t agree to raise supply soon, high oil prices will also likely lead to demand destruction in even more cost-sensitive emerging markets, especially India,” Eurasia Group analysts.
Disagreement oversupply policy within the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, known as OPEC+, led to the end of talks last week on boosting production without agreement.
“Crude is unlikely to break out of its July highs until some clarity appears over resolving the… production standoff,” Jeffrey Halley, senior market analyst at OANDA.
The International Energy Agency said global withdrawals from storage in the third quarter were set to be the most in at least a decade, pointing to early June stock draws from the United States, Europe and Japan.
U.S. stockpiles of oil and gasoline inventories fell last week, according to two market sources on Tuesday, citing American Petroleum Institute figures.
Crude inventories declined by 4.1 million barrels for the week ended July 9, the sources said, which would be their eighth straight weekly fall.