Oil steady as supply worries offset China demand uncertainty

Oil prices were little changed on Tuesday, after rising for the past five sessions, as concerns about limited spare capacity in the market and uncertainty over Russian supplies offset mixed oil data from top crude importer China.

Brent crude futures rose 18 cents to US$86.36 per barrel by 0730 GMT after settling 0.4% higher on Monday.

U.S. West Texas Intermediate crude was at US$80.62 per barrel, up 16 cents, following a 1% gain in the previous session.

Brent and WTI are set to gain for a sixth session, which for Brent would be the longest streak since May 2022.

“The supply concerns that helped oil prices higher overnight likely stemmed from Chevron’s CEO comment that there’s ‘not a lot of swing capacity’ in oil markets,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

“The key unknown for 2023 will be the disruption to Russia’s oil and refined product exports.”

Chevron Corp chief executive Mike Wirth said at a conference in Houston on Monday that ships carrying Russian crude and products now have to travel longer distances to reach non-sanctioned markets while oil inventories and swing supplies are limited, making the global market vulnerable to any unexpected supply disruption.

Mixed oil trade data from China capped gains, as crude oil imports during January and February fell by 1.3% from a year earlier to 10.4 million barrels per day (bpd) even though analysts pointed to accelerating imports in February as a sign that fuel demand was rebounding.

Customs does not give a breakdown for the individual months to avoid mismatches in the data from the Lunar New Year holiday that typically falls during the period but analysts who track shipping data said China’s January imports were below year-earlier levels.

The data also showed that oil product exports such as gasoline, diesel and jet fuel in the first two months of 2023 rose by 74.2% from a year earlier, raising concerns about demand for fuel in the world’s second biggest oil consumer.

In the U.S., this week’s reports of crude and product inventories for the week ended 3 March are expected to show decreases, a preliminary Reuters poll showed on Monday.

This could be the first decrease in 10 weeks, taking into consideration earlier official Energy Information Administration data.

The weekly reports from the American Petroleum Institute, an industry group, are due at 4:30 p.m. ET (2130 GMT) on Tuesday, and at 10:30 a.m. (1530 GMT) on Wednesday from the Energy Information Administration.

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