On Thursday, oil retreated from multi-month peaks hit in the last session as higher US crude records and stagnant economic data from China caused worry regarding global fuel demand.
Brent crude dipped 0.1%, or 9 cents, to $87.46 per barrel by 04:08 GMT after closing at its highest since Jan. 27 in the last session.
West Texas Intermediate crude (WTI) dipped 0.1%, or 6 cents, to $84.34 after closing at its highest since November of last year.
According to data released by the U.S. Energy Information Administration on Wednesday, U.S. crude inventories (USOILC=ECI) rose by 5.9 million barrels in the previous week to reach 445.6 million barrels, above analysts’ expectations in a Reuters poll for a 0.6 million barrel gain.
The previous week saw the steepest decline in U.S. crude oil exports ever, falling by 2.9 million barrels per day to 2.36 million barrels per day (bpd), the data revealed. But according to Phil Flynn, an analyst at Price Futures Group, the market will predict that oil exports would increase as a result of the disparity between U.S. crude futures and Brent.
As the second-largest economy in the world struggled to revive demand, the consumer sector in China experienced deflation, and factory-gate prices continued to decline in July.
 “A 5% growth forecast from China, which looked way too modest to digest at the beginning of 2023 has started to look way too optimistic as China is failing to hold economic revival post-COVID,” mentioned Priyanka Sachdeva, senior market analyst at Phillip Nova.
The market is waiting for July’s Consumer Price Index (CPI) from America, slated for Thursday, which will show the Fed’s future monetary policy. Market watchers anticipated the CPI to reveal a somewhat year-over-year increase, while on a monthly basis, consumer prices are seen rising 0.2%, the same rate as June.
Worries over LNG supply led to a roughly 2-month high in European gas prices on Wednesday and uplifted the demand outlook for diesel as an optional fuel.
Supply concerns, however, continued to support oil prices as tensions in the Black Sea between Russia and Ukraine threatened to jeopardize Russian oil shipments.
“Oil prices have been resilient to a weak economic showing out of China in recent weeks, with market participants choosing to place their focus on the tighter supplies conditions from Saudi Arabia and Russia’s output cuts to continue their unwind from previous bearish positioning,” noted Yeap Jun Rong, market analyst at IG.
Saudi Arabia, the world’s largest exporter, intends to continue its voluntary production reduction of 1 million barrels per day for one more month, including September. Russia also announced a 300,000 bpd reduction in oil exports for September.