Oil falls more than 1.5%, records lowest close since Aug. 2

Oil drilling rigs

Oil prices closed lower today, Aug. 15, widening losses since the beginning of the week, as markets assessed demand prospects in light of the economic data from China that questioned the extent of recovery of the second largest economy in the world.

Official data showed that Chinese retail sales rose by 2.5% in July on an annual basis, while it was expected to increase by 4.5%. Industrial production rose in July by 3.7% on an annual basis, which came below expectations of a 4.5% rise.

The decline in crude prices comes despite data from the National Bureau of Statistics, which showed that the productivity of Chinese refineries reached 14.87 million barrels per day in July, up 17.4% year on year and the third highest reading on record, as strong summer travel led to a rise in domestic demand.

Russia’s oil export tax was set at $21.40 per ton starting in September – the highest level this year – as the country tries to raise income from oil as crude prices rise, and this equates to about $2.92 per barrel, Bloomberg reported, citing the Russian Finance Ministry.

Meanwhile, the US Bureau of Labor Statistics reported that the import price index increased by 0.4% in July, on a monthly basis, which is more than expectations of 0.2% increase. The rise was supported by higher fuel import costs by 3.6% during the month.

The oil price index rose 3.5% in July, after an increase of 2.1% in June, marking the first time since oil prices rose for consecutive months in June 2022.

The Energy Information Administration (EIA) expects shale oil production in the US to decline in September to 9.41 million barrels per day – the decline comes for the second month in a row – with expected production recording its lowest level since May.

The American Petroleum Institute report on oil inventories is expected to be issued later today, and the EIA is scheduled to release official data for inventories on Aug. 16, amid expectations of a decline in crude stocks by more than two million barrels.

Brent crude futures for October delivery fell 1.5%, or $1.32, to close at $84.89 a barrel – the lowest since Aug. 2.

WTI crude for September delivery fell by 1.85%, or $1.52, to $80.99 a barrel—also the lowest since Aug. 2.