(LONDON) Oil prices stabilized on Wednesday ahead of US inventories, amid concerns about Chinese demand and tight supply, when European natural gas rose amid threats of strikes at major Australian facilities.
Around 6:30 a.m. (Eastern time) (12:30 p.m. in Paris), a barrel of Brent from the North Sea, for delivery in October, lost 0.13% to 84.77 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in September, yielded 0.15% to 80.87 dollars.
“Concerns around the Chinese economy seem to be the main focus in the market at the moment,” overshadowing “bullish signals such as falling inventories in the United States and production cuts among” exporting nations of OPEC, comment analysts from Energi Danmark.
“China’s economic recovery will have to ride the waves and will experience a torturous progress, inevitably with difficulties and problems,” said Wang Wenbin, a spokesperson for the Chinese Ministry of Foreign Affairs, on Wednesday.
From retail sales to industrial production, the country released a disappointing slew of data earlier this week, even suspending the monthly release of its detailed youth unemployment figures.
Investors are also awaiting release of the U.S. Commercial Weekly Inventory Statement from the U.S. Energy Information Agency (EIA) for the week ended August 11.
The industry federation, the American Petroleum Institute (API), estimated on Tuesday evening that crude inventories fell by about 6.2 million barrels last week, and that those of gasoline fell by approximately 761,000 barrels. However, API data is considered less reliable than EIA data.
This “indicative decline” in reserves “could mark the beginning of a downward trend in US oil inventories,” notes Bjarne Schieldrop, an analyst at SEB.
“This should provide a solid foundation for oil prices in the third quarter of 2023,” he continued.
Analysts are expecting a drop of 2.5 million barrels in commercial crude reserves, and 1.1 million barrels of gasoline, according to the median of a consensus compiled by Bloomberg.
On the natural gas side, the Dutch TTF futures contract, considered the European benchmark, was moving without clear direction, at 38.40 euros per megawatt hour (MWh), shortly after climbing to 42.66 euros per MWh.
“The evolution of gas prices in Europe continues to be dominated by strike threats […] in Australia, jeopardizing 10% of the world’s production of LNG (liquefied natural gas, editor’s note)”, comment analysts from DNB.
Gas prices had already soared last week following the call for a strike at the offshore liquefied natural gas platforms at Woodside in Western Australia.
If European summer demand for natural gas remains weak, analysts fear that Asian buyers in need of LNG will shift to the European market, driving up demand and prices.
