Aug 22 (Reuters) – Oil prices settled lower on Tuesday as investors remained focused on the possibility that the economic crisis in China will continue to hamper demand from the world’s largest importer of crude.
The settlement price for Brent crude was set down 43 cents, or 0.5 percent, at $84.03 a barrel, while the most active US October contract fell 48 cents to $79.64.
The first-month WTI contract settled down 37 cents at $80.35 a barrel on very limited volume ahead of its imminent expiration.
China, the world’s second largest economy, is seen as crucial to supporting oil demand during the rest of the year. Its sluggish economic activity frustrated markets as promised stimulus fell short of expectations, including a smaller-than-expected cut in a key lending benchmark on Monday.
“The Saudi and Russian production cuts have been canceled in large part due to weak crude demand from China that appeared to develop last month and is likely to continue through the rest of the summer,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
Adding to demand concerns, US central bank officials have not ruled out further rate hikes to contain inflation.
The United States continued to draw down crude oil inventories, which fell by about 2.4 million barrels in the week ending Aug. 18, according to market sources citing API figures on Tuesday.
The official Iraqi News Agency reported that the Iraqi and Turkish oil ministers discussed the importance of resuming oil flows after completing pipeline maintenance, a development that could boost global supplies.
Turkey halted Iraq’s 450,000 bpd exports – roughly 0.5% of global supply – via the northern Iraq-Turkey pipeline in March following an ICC arbitration ruling.
“Such a resumption of export could add nearly half a million barrels per day to global oil supply, significantly lowering Saudi Arabia’s additional production cut, which is expected to extend into next month,” Ritterbusch said.
Separately, Shell said on Monday it was investigating a possible leak in the 180,000-bpd Trans-Niger oil pipeline, although no force majeure had been declared.
(Reporting by Natalie Grover and Paul Carsten in London, Mio Show in Singapore and Katya Golubkova in Tokyo; Reporting by Mohamed for The Arabic Bulletin) Editing by Thomas Janowski, David Evans, David Goodman, David Gregorio and Cynthia Osterman
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