Oil Drops amid Thin Economic Reports from China and Japan

On Wednesday, oil prices fell, losing previous gains spurred by unfavorable economic data from China and Japan which has heightened investor concerns about oil demand and development among the prominent global consumers.

According to Reuters, at 0501 GMT, Brent crude futures dipped by 0.3%, to $104.30 per barrel, whereas U.S. West Texas Intermediate (WTI) futures were down by 0.5% to $100.14 a barrel. This comes after both contracts reached above 6% during the last session.

Japan on Wednesday recorded its highest monthly plunge in core machinery demand in almost two years, exacerbated by a major fall in orders from the IT and other service sectors.

China, which is the world’s largest oil buyer, reported a 14% drop in its oil imports spurred by retreating demand due to lockdowns and other restrictions as the country battles its worst outbreak of COVID-19 since March, 2020. As per data from the General Administration of Customs on Wednesday, this comes after the country purchased 42.71 million tonnes of oil the previous month.

Even though on Tuesday, Chinese markets posited a bullish outlook for oil on account of easing COVID-19 restrictions, OANDA’s Senior Market Analyst Jeffrey Halley contended that Asian markets remain less optimistic about China’s outbreak than the ones abroad.