China’s Consumer Price Index Falls for First Time in Two Years
August 9, 2023
Crude oil prices closed higher in yesterday’s trading after falling in the early morning trading hours. Prices fell on poor economic data from China. Their exports and imports were worse than expected raising concerns about their economy and price felt this pressure. But prices rebound later in the day and closed strong as Saudi Arabia again confirms their commitment to cutting supplies with voluntary production cuts that will take roughly 90 million barrels of crude oil out of the market over the next 2 months.
China’s consumer price index fell for the first time in more than two years. Producer prices fell for a 10th consecutive month, contracting 4.4%.
The API inventory report estimated crude stocks up 4.1 million barrels and the estimates for today’s DOE update from the Bloomberg Survey are stocks up 1.944. API had gasoline stocks down 400,000 and the estimate for today is down 332,000. The API called distillates down 2.1 million and the outlook for today is up 54,000.
UBS said it retains its positive outlook for oil prices and forecast Brent crude oil prices to move to $90 per barrel by the end of 2023. It said oil demand is set to surpass 103 million bpd in August for the first time. This demand will be driven by China, India, Brazil, and the Middle East. It expects oil supply to remain tight in the coming weeks, given the extension of Saudi and Russian led production and export cuts. UBS sees a market deficit of about 2 million bpd in July and August compared with about 700,000 bpd in June. It added that September could see a deficit of more than 1.5 million bpd.
In its Short-Term Energy Outlook, the EIA projected GDP growth of 1.9% in 2023, up from a previous forecast of 1.5%. The EIA also forecast Brent crude oil prices will average $86 per barrel in the second half of the year, up about $7 per barrel from a previous forecast.