The front-month ICE Brent contract moved $0.41/bbl lower on the day, to trade at $83.75/bbl at 09.00 GMT.

Upward pressure:

Brent’s price found some support after the American Petroleum Institute (API) estimated a 4.44 million-bbl decline in US crude oil inventories in the week that ended 12 July.

Market analysts polled by Reuters expected a draw of 33,000 bbls. A decline in US crude stocks is seen as a positive indicator of oil demand growth in the world’s largest oil consuming nation and could push oil prices higher.

Russia’s Deputy Prime Minister Alexander Novak assured that the global oil market will remain well-balanced, even if some OPEC+ producers gradually start ramping up production in the fourth quarter of this year, according to reports.

“The [oil] market will always be balanced thanks to our [OPEC+] actions,” Russia’s state-owned media agency TASS cited Novak as saying.

Russia plans to deepen output cuts to compensate for the extra crude pumped above its quota in 2024.

Downward pressure:

Concerns over declining oil demand growth in China have continued to cap Brent’s price gains this week.

The country’s crude throughput in June touched this year’s lowest level and raised concerns about oil products demand growth. Chinese refineries processed about 58.32 million mt (14.19 million b/d) of crude oil in June, down 3.7% from the same period a year ago, according to data from China’s National Bureau of Statistics (NBS).

“China oil demand seems to weigh on [oil] prices,” Price Futures Group’s senior market analyst Phil Flynn said.

Brent’s price felt more downward pressure as the greenback gained strength against other major currencies, following a failed assassination attempt on former US President Donald Trump. This news has increased bets on Trump’s victory in the upcoming US elections. 

A stronger US dollar makes commodities like oil costlier for non-dollar holders and weighs on demand growth in the market.

“Oil prices saw their steepest decline in over three weeks, influenced by a stronger dollar and indications of reduced demand,” analysts from Saxo Bank said in a client note.

Source: ENGINE by Aparupa Mazumder