Oil steadies amid fuel demand concerns and easing supply

China's Sinopec expects demand for refined products in the world’s second-largest economy to grow at a slower pace

Oil tankers at a terminal of Sinopec Yaogang oil depot in Nantong, China. Reuters

Oil prices were steady on Tuesday amid fuel demand concerns in China and easing supply.

Brent, the benchmark for two thirds of the world’s oil, was trading 0.02 per cent lower at $84.40 a barrel at 11.29am UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.07 per cent at $80.04 a barrel.

On Monday, Brent settled 0.07 per cent lower at $84.42 a barrel. WTI closed up 0.34 per cent at $80.10 a barrel.

“Yesterday was just another day the Chinese stimulus measures didn’t get the attention Chinese officials were hoping for, and that’s the new normal,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“Before 2020, any stimulus news from China would move oceans, but now, China can cut rates, [and] inject liquidity … nothing is enough to bring investors back apart from a massive fiscal stimulus,” she said.

China Petroleum and Chemical Corporation (Sinopec), the country’s largest refiner, said demand for refined products in the world’s second-largest economy would grow at a slower pace in the second half of the year than in the first.

Sinopec’s refinery throughput grew by 4.8 per cent to 126.54 million tonnes in the first half of 2023. The company plans to process 127 million tonnes of crude in July to December.

“In the second half of 2023, China’s economy is anticipated to improve with good momentum. Given the comprehensive impact of geopolitics, changes in global supply, demand and inventory, international crude oil prices are expected to fluctuate at medium and high price level,” the company said in a filing to the Honk Kong Stock Exchange, where its shares are traded.

The Asian country's post-coronavirus economic recovery has lost momentum mainly due to a deepening property slump and weak consumer spending.

On Monday, China halved the stamp duty on stock transactions in the latest attempt to boost the country’s struggling market, state news agency Xinhua reported, citing the Finance Ministry.

China's securities regulator has approved the launch of 37 retail funds to help infuse new capital into the market and said it would slow the pace of initial public offerings.

Crude prices are headed for a slight monthly loss after rising in July amid concerns about China’s economy and rising supply from countries such as Iran and Venezuela.

As tensions cool with the US, Iran aims to boost its crude production to 3.4 million barrels per day by the end of summer, from 3.2 million bpd currently, Oil Minister Javad Owji was quoted as saying by Iranian state news agency Shana last week.

The US is in talks with Caracas to explore a temporary lifting of sanctions in exchange for fair elections next year, Bloomberg reported on Thursday.

The possibility of further monetary tightening has also weighed on futures.

At the Jackson Hole symposium in Wyoming last week, US Federal Reserve chairman Jerome Powell said the central bank would continue to aim to bring inflation down to 2 per cent.

The US economy is not cooling as expected, with stronger-than-anticipated gross domestic product growth and “especially robust” consumer spending, he said.