Oil Steady as China Concerns Jostle With Tightening Inventories - Yahoo Finance

Oil Steady as China Concerns Jostle With Tightening Inventories

(Bloomberg) -- Oil steadied as traders weighed concerns over China’s faltering economy against industry estimates pointing to lower US inventories.

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West Texas Intermediate held near $81 a barrel after losing 2.6% in the week’s first two sessions. Equity indexes and other commodities fluctuated amid growing jitters in China’s stock market and shadow banking industry, which have added to signs that the Asian giant’s economy is stuttering.

Still, the American Petroleum Institute said nationwide crude stockpiles shrank 6.2 million barrels last week, according to people familiar with the figures. Inventories at the key Cushing, Oklahoma, hub were also seen declining.

Oil has retreated this week following a surge driven by supply cuts from OPEC+ linchpins Saudi Arabia and Russia, and estimates that worldwide crude consumption is running at a record pace. Banks have cut growth estimates for China as the nation’s gargantuan real estate sector flounders.

“With the disappointing turn in China’s economic data dominating headlines lately, sentiments around oil prices are being kept in check” despite the API figures, said Yeap Jun Rong, market strategist at IG Asia Pte. Official figures on US stockpile moves are due for release later on Wednesday.

Timespreads have narrowed in tandem with crude benchmarks in recent sessions. The gap between WTI’s two nearest contracts was about 50 cents a barrel in backwardation compared with last week’s intraday peak of 76 cents a barrel. The backwardated structure, however, still implies near-term tightness.

Reflecting that underlying positivity, UBS Group AG raised its Brent forecast for the year-end by $5 to $95 a barrel as demand is set to rise to a record.

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--With assistance from Grant Smith.

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