By Noah Browning
LONDON (Reuters) – Oil prices fell in choppy trading on Tuesday as a clouded oil demand outlook outweighed the potential boost from a cut to China’s benchmark lending rates.
Brent crude fell 92 cents, or 1.2%, to $75.17 a barrel by 1345 GMT. U.S. West Texas Intermediate (WTI) crude for July was down $1.53 from Friday’s close at $70.25. The July contract expires at the end of trade on Tuesday.
The more active WTI crude contract for August delivery was down $1.51 from Friday at $70.42 a barrel. There was no WTI settlement on Monday because of a U.S. public holiday.
China on Tuesday cut two benchmark lending rates by 10 basis points each. The cuts, the first in 10 months, were less aggressive than some forecasts.
A resulting improvement in oil demand, however, appears to be far from certain.
“Oil traders may need to see a materialised strong economic rebound in China to improve their outlook on oil demand,” said Tina Teng at CMC Markets in Auckland.
The rate reductions follow recent economic data that showed China’s retail and factory sectors are struggling to sustain momentum from earlier this year.
China’s 2023 crude oil demand is expected to rise 3.5% on last year, a researcher at China National Petroleum Corporation’s (CNPC) research arm said on Tuesday, down about 1% from a previous estimate in March.
Meanwhile China’s fuel oil imports eased slightly in May after hitting a decade-high in April.
The Chinese government met last week to discuss measures to spur economic growth and several major banks cut their 2023 economic growth forecasts for China amid fears that its post-COVID recovery is faltering.
On the supply side, Iran’s crude exports and oil output have hit new highs this year despite U.S. sanctions.
Russia is also set to increase seaborne diesel and gasoil exports this month, outweighing cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia itself.
(Reporting by Noah Browning; Additional reporting by Katya Golubkova in Tokyo and Andrew Hayley in Beijing; Editing by Jason Neely and David Goodman)
