Oil prices continued to be weighed down in Asian trade on Wednesday by growing concerns about China's economic growth and oil demand which were offsetting an estimated drop in U.S. crude oil inventories.
In Asian trade, both benchmarks were dropping by around 0.2%, with the U.S. WTI Crude benchmark clawing back to the $80 per barrel handle after falling to $79.50 earlier on Wednesday.
The international benchmark, Brent Crude, had dropped to about $83.60, as concerns about slowing Chinese economic and oil demand growth put downward pressure on prices for a third consecutive day this week.
A strong U.S. dollar weighed on oil prices earlier this week. A strengthening greenback tends to drag oil prices down because it makes oil more expensive for holders of other currencies.
This added to several bearish data points from China, including indications of weak fuel demand and economic growth coming in lower-than-expected for the second quarter.
China's GDP growth was 4.7% in the second quarter, below expectations of 5.1%. Retail sales in June were also weaker than anticipated.
Moreover, refinery output in the world's top crude oil importer dropped by 3.7% in June compared to the same month last year, amid tepid fuel demand and weakening refining margins, which prompted independent refiners to slash crude processing rates.
Data from last week showed that China's imports of crude oil slumped by 11% in June from a record high in the same month of 2023, due to weak demand and refining margins.
In its monthly report last week, the International Energy Agency (IEA) said that underwhelming Chinese consumption is slowing down growth in global oil demand.
All these concerns have weighed on oil prices, but an estimated drop of 4.44 million barrels in U.S. crude inventories and rising chances for a Fed interest rate cut in September prevented WTI prices from staying below $80 a barrel early on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More