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| The reason why China has sharply reduced its crude oil imports from Saudi Arabia. (Illustration photo - Source: Reuters) |
World oil prices fell in the trading session on August 21, as the market no longer had much expectation about demand in China.
Brent crude fell 34 cents, or 0.4%, to $84.46 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.65%, to $80.72 a barrel. Both crudes had risen as much as $1 earlier in the session.
Commenting on the demand outlook in China, Mr. John Kilduff, an expert at the capital management company Again Capita, expressed doubts that the country would continue to increase oil purchases, because earlier this year, the country imported a lot of crude oil for storage.
Saudi Arabia’s oil exports to the Northeast Asian country fell 31% in July from June, according to Chinese customs data, while Russia remained Beijing’s largest crude oil supplier. Analysts predict that China’s imports of Saudi Arabian crude will continue to decline in the third quarter.
China's crude oil inventories have steadily risen to a record high this year, as refiners cut purchases after prices rose above $80 a barrel under the impact of a production cut agreement by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
Last week, Brent and WTI both fell 2%, ending a seven-week winning streak, amid concerns that China’s slowing economic growth will curb oil demand, while the possibility of the US Federal Reserve continuing to raise interest rates also raised concerns about the outlook for oil demand.
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