Oil prices stablised after losing about 6% in the global commodity market this week due to uncertainties that clouded the supply and demand of crude complex.
Brent crude and WTI are both flat at $74.45 and $70.70 a barrel, respectively, after settling higher in the previous session following an unexpected weekly draw in U.S. crude stocks.
Crude oil prices ended higher for the first time in four sessions yesterday, as US oil inventories fell more than anticipated while Middle East tensions linger.
US commercial crude oil inventories fell by 2.2 million barrels over the last week, in contrast to the market expectations of a build of 1.5 million barrels, according to energy agency.
The draw was largely driven by lower crude imports, which fell by 710,000 b/d week-on-week. Total crude oil inventories now stand at 420.5 million barrels for the week ending on 11 October, about 5% below the five-year average.
US Gasoline inventories decreased by 2.2million barrels compared to market expectations for a decline of around 1.7m barrels. Similarly, distillate stocks dropped by 3.5 million barrels, higher than the average market expectation for an outflow of 2.2m barrels.
The latest industrial output data from China shows that domestic refining activity continued to fall in September, ING commodities strategists said in a note.
The latest data from the National Bureau of Statistics (NBS) shows that crude processing fell by 5.4% year on year, to around 58.73mt (around 14.3m b/d) in September as more units were shuttered for seasonal maintenance.
Chinese domestic demand was also weaker, falling by close to 7% year on year to 14.2 million b/d last month, while cumulative demand declined 3.8% year on year to around 14.0 million b/d over the first nine months of the year.
China’s economy slowed in the third quarter, highlighting the urgency to roll out measures to boost growth, but retail sales and industrial production showed signs of stabilization in September.
Concerns over sluggish oil demand in the world’s second largest economy are weighing heavily on prices, but crude is still finding underlying support from heightened geopolitical tensions in the Middle East.
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