Oil closes lower, Brent at lowest level in 2 weeks

Oil drilling rigs

Oil settled lower today, Aug. 16, extending losses for the third consecutive session, after a series of gains over the past seven weeks. The decline came despite data showing an unexpected decline in US inventories.

The Energy Information Administration (EIA) data showed that crude oil inventories decreased by 6 million barrels to 439.7 million barrels, compared to expectations of 2.1 million barrels rise, during the week ended Aug. 11.

Premier Li Qiang said during a Cabinet meeting that China will continue to pursue policies aimed at boosting consumption and encouraging investment, Reuters reported.

This comes after weak economic data on retail sales and industrial production issued on Aug. 15, which raised fears of recession in the world's second largest economy and questioned the possibility of reaching the Chinese growth target of 5% this year.

On the other hand, the dollar index rose after the release of economic data that showed the resilience of the US economy. Industrial production grew by 1% in July on a monthly basis, exceeding expectations for a growth of 0.3%. This raises concerns about continued monetary tightening by the Federal Reserve for a longer period.

The latest Federal Reserve minutes showed that most policy makers see continued inflation risks, which means the need for high interest rates, with no recession expected in 2023, in exchange for weak economic growth over the next two years.

Brent crude futures for October delivery fell 1.7%, or $1.44, to $83.45 a barrel — the lowest settlement since Aug. 2.

WTI crude for September delivery fell by nearly 2%, or $1.61, to $79.38 a barrel — the lowest settlement since July 26.