Oil was up Wednesday morning in Asia, even as it recorded a fifth day of declines. The fuel demand outlook remains clouded, as restrictive measures to curb the uptick in COVID-19 cases globally also keeps transport usage levels low.
“July oil demand looks pretty weak because of China’s industrial and retail slowdown, the floods there, as well as severe port congestion and a government clamp-down on the import quote of private refiners,” Eurasia Group energy director Henning Gloystein said in a note.
“In India, the economic fallout of the severe COVID-19 outbreak earlier this year still weighs on the economy and consumer travel behavior,” the note added. The fallout led India, the third-largest oil importer globally, to begin selling oil from its Strategic Petroleum Reserve to state-run refiners.
In the U.S., Tuesday’s crude oil data from the American Petroleum Institute showed a draw of 1.163 million barrels for the week ending Aug. 13. Forecasts prepared by Investing.com predicted a 1.259-million-barrel draw, while an 816,000-barrel draw was reported during the previous week.
Investors now await crude oil data from the U.S. Energy Information Administration (EIA), due later in the day.
The EIA’s monthly drilling output report also said that U.S. shale oil production is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020.
Meanwhile, a stronger dollar was also hitting commodities across the board, with metals and precious gold in particular as “equally fragile” as oil, ANZ Research said in a note.