© Reuters.
Investing.com– Oil prices moved little in Asian trade on Wednesday, sticking to near five-month lows after a warning on China’s economy rattled markets, while signs of an unexpected build in stockpiles also added to pressure on prices.
Crude prices plummeted over the past six weeks, with a bulk of losses coming in recent sessions after the Organization of Petroleum Exporting Countries and allies largely underwhelmed markets with its plans to cut production further in 2024.
The middling cuts indicated that oil markets will not be as tight as initially anticipated in early-2024. They also came amid growing concerns over worsening economic conditions across the globe, which are expected to result in weaker oil demand through the coming year.
expiring February rose 0.1% to $77.29 a barrel, while steadied at $72.58 a barrel by 20:59 ET (01:59 GMT). Both contracts were at their weakest levels since early-July.
Demand concerns persist, China warning weighs
Sentiment was hit particularly hard after ratings agency Moody downgraded its credit outlook on China to negative, and flagged increased economic risks to the country from a property market downturn and a lack of government stimulus.
China is the world’s largest oil importer, and has steadily built up its oil inventories this year- a trend that could see the country wind down oil imports in the coming months, especially if economic conditions worsen.
Moody’s warning on China came on the heels of several weak purchasing managers index (PMI) readings from the country, which indicated that business activity in the world’s largest oil importer remained weak. The country is also grappling with a new outbreak of respiratory illnesses in its major cities.
Concerns over China were also coupled with weak economic prints from most major economies. PMI data from Japan, the U.S. and the euro zone largely underwhelmed in November.
US inventories unexpectedly rise- API
Data from industry group the (API) showed that oil inventories grew 594,000 barrels in the week to Dec 1, compared to expectations for a draw of over 2 million barrels.
The API data also showed a 2.8 million barrel increase in gasoline inventories, along with a small decline in distillate stocks.
The reading, which usually heralds a similar trend in , indicated that U.S. inventories likely grew for a seventh straight week, as fuel demand in the country cooled with the winter season.
But the strong build in inventories was also driven by U.S. oil production reaching record highs in recent weeks. This trend added to concerns that oil markets will not be as tight as initially expected, with the U.S. now seeming to fill a production gap left by the OPEC+.
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