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Oil price down as weak China data offsets output cuts

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Oil prices fell by 1 percent on Tuesday after data showed China’s imports and exports fell much more than expected in July in yet another sign of a sluggish post-COVID rebound for the world’s largest oil importer.

Brent crude futures were down 93 cents, or about 1.1 percent, at $84.41 a barrel at 0815 GMT. U.S. West Texas Intermediate crude was down 88 cents, or about 1.1 percent, at $81.06.

China’s oil imports were 10.29 million barrels per day (bpd) in July, data showed on Tuesday. That was down 18.8 percent from June, but still up 17 percent from a year earlier.

The country’s overall imports dropped 12.4 percent and exports fell 14.5 percent from a year earlier, both steeper declines than expected.

Despite the gloomy data, some analysts were still positive on China’s fuel demand outlook for August to early October.

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The peak season for construction and manufacturing activity starts in September and gasoline consumption should benefit from summer travel demand, said CMC Markets analyst Leon Li. Demand is expected to decrease gradually after October, he added.

On the supply side, Saudi Arabia last week said it would extend a voluntary oil output cut of 1 million bpd for another month to include September, keeping the door open for further cuts by the world’s biggest oil exporter.

Russia also said it would cut oil exports by 300,000 bpd in September.

“Saudi Arabia’s decision to extend production cuts into September despite Brent futures rising above $80 per barrel suggests that the kingdom may be targeting a higher price than $80,” said Vivek Dhar, mining and energy commodities strategist at Commonwealth Bank of Australia.

Investors are also awaiting U.S. oil and fuel products inventory data.

“Overlapping, concentric and oppositional influences continue to bring nervousness to our market and oil prices will have to lean again on the state of world inventories to keep its winning ways,” said John Evans, of oil broker PVM.

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