Oil perched between demand concerns and supply strains

Global oil prices were little changed on Wednesday as markets weighed US demand concerns against China’s pledge to support economic growth.

Brent futures were flat at $79.63 a barrel by 0800 GMT, while US West Texas Intermediate (WTI) crude edged 10 cents lower to $75.65 per barrel.

“With the Fed likely to raise interest rates for the last time in July, concerns about US demand that will limit oil price gains are likely to remain,” said CMC Markets analyst Leon Li.

However, on the positive front, China’s top economic planner pledged on Tuesday it would roll out policies to “restore and expand” consumption in the world’s second-largest economy, which could boost oil demand.

“So far, as long as we assume the stimulus in China is going to be successful, oil balances will tighten significantly – even if Europe was to fall in a mild recession,” said Rystad Energy’s North America research director Claudio Galimberti.

On the supply side, data from the American Petroleum Institute (API), an industry group, showed crude oil, gasoline and distillate inventories all fell last week.

PVM analyst John Evans said one of the main reasons behind the market’s benign opening was the API report, with the expectant crude draw of 2.3 million barrels turning into a mere 800,000 barrels.

“Those of us expecting some fireworks … are sorely disappointed as it lands with a bit of a whisper rather than a bang,” he said.

Meanwhile, Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.