Tokyo - Oil prices retreated in Asia on Wednesday as traders focus on US crude stockpile report, a day after growing concerns over China's economy sparked a massive sell-off in shares of commodity firms.
As Asian stocks recovered from Tuesday's rout, oil prices remain under pressure because demand growth continues to fall behind crude supply, analysts said.
The US benchmark, West Texas Intermediate (WTI) for November delivery, fell 44 cents to $44.79 and Brent crude dropped 36 cents to $47.87 a barrel in late-morning trade.
Both contracts closed higher on Tuesday after sinking on Monday along with equities following dismal industrial data that reignited doubts about China's commodity-hungry economy.
“At the end of the day, the fundamentals of supply and demand remain intact,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
He said traders are training their sights on a report to be released later Wednesday on US commercial crude stockpiles for the week ending September 25. The report is a closely watched gauge for demand in the world's top oil consuming nation.
Analysts expect the report to show lower stockpiles, in part due to an anticipated drop in US crude production and low utilisation rates by US refineries.
Traders are also worried about the Chinese economic slowdown because of its impact on demand for raw resources, including oil.
“Myriad high frequency indicators continue to point towards a slowdown in the Chinese economy,” said Andrew Wood, head of Asia country risk research at BMI Research, a member of the Fitch Group.
These indicators include “deepening producer price inflation, weak energy consumption growth, contracting manufacturing activity, and a contraction in monthly rail freight volume,” he wrote in a market commentary.
“As such, we maintain our below-consensus forecast for real GDP growth to come in at 6.7 percent in 2015, ahead of a further slowdown to 5.9 percent in 2016.”
Ang of Phillip Futures expects the support for WTI prices at $44.27 a barrel and $47.29 for Brent.
AFP