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Investing.com– Oil prices fell slightly in Asian trade on Wednesday as data pointed to a large weekly build in U.S. inventories, while weak economic signals from major importer China continued to dent the outlook for demand.
After Chinese trade data disappointed markets on Tuesday, Chinese consumer inflation sank for the first time in nearly two years, data showed on Wednesday. The reading pointed to more economic headwinds for the world’s largest oil importer.
Brent oil futures fell 0.2% to $86.03 a barrel, while West Texas Intermediate crude futures fell 0.2% to $82.76 a barrel by 22:23 ET (02:23 GMT).
Crude prices had settled higher after a whipsaw session on Tuesday, as a positive outlook for the U.S. economy helped somewhat offset concerns over slowing economic growth and oil demand in China.
The prospect of tighter oil supplies this year, especially following bumper supply cuts from Saudi Arabia and Russia, kept prices trading close to four-month highs.
But data pointing to an unexpected build in weekly U.S. inventories raised some questions over just how much supplies will tighten in the coming months.
Strength in the U.S. dollar, ahead of key inflation data due on Thursday, also weighed on oil prices.
Chinese inflation weakens further in July
Chinese consumer price index inflation slid into negative territory for the first time since September 2021, data showed on Wednesday. Producer price index inflation also shrank for a 10th straight month, amid worsening economic conditions in the country.
While month-on-month CPI inflation showed some signs of improvement, it was still well below healthy levels, indicating that economic weakness in the world’s largest oil importer was unlikely to improve in the near-term.
The soft inflation readings follow data on Tuesday which showed that Chinese oil imports also tumbled through July. This in turn fueled more doubts over a recovery in Chinese oil demand this year.
U.S. inventories unexpectedly rise
Data from the American Petroleum Institute (API) showed on Tuesday that U.S. crude inventories grew by over 4 million barrels in the week to July 28, much more than expectations for a draw of 0.2 million barrels.
The build comes after inventories saw their biggest draw on record in the week to July 21, of over 17 million barrels.
But the unexpected build for last week showed that U.S. fuel demand may now be winding down, as the end of the summer season approaches.
Official inventory data from the Energy Information Administration is now due later in the day, and is expected to show a draw of 0.2 million barrels.
Source: Investing.com
