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Oil prices dip in Asian trade amid cautious market sentiment

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Oil prices edged down in Asian trading on Tuesday after gains in the previous session, as markets remained cautious about global demand growth prospects amid expectations of stronger supplies.

Global benchmark Brent crude futures slipped 12 cents, or 0.14%, to $84.13 per barrel at 0615 GMT. U.S. West Texas Intermediate crude futures fell 14 cents, or 0.17%, to $80.19 a barrel. Both benchmarks had gained around 2% on Monday, closing at their highest since April.

“The oil market shifted its focus back to fundamentals, which have been soft for some time,” said Francisco Blanch, commodity and derivatives strategist at Bank of America, in a client note.

He added that global crude oil inventories and refined product storage in the United States and Singapore, among other places, were higher.

Blanch noted that global oil demand growth decelerated to 890,000 barrels per day year-on-year in the first quarter, with data suggesting further consumption slowdown in the second quarter.

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China’s oil refinery output slipped 1.8% from year-ago levels in May, according to statistics bureau data released on Monday. This decline was attributed to planned maintenance overhauls and processing margins pressured by rising crude costs.

Markets are also looking for further clues on interest rates and the U.S. demand situation, with several U.S. Federal Reserve representatives scheduled to speak later on Tuesday.

Some analysts remain bullish on the price impact of an extension by the OPEC+ group of supply cuts in the near term.

“The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025,” said Patricio Valdivieso, Rystad Energy vice president and global lead of crude trading analysis.

“Under these conditions — and the disconnect between the OPEC+ demand outlook and all other agencies — it is hard to remain fully bearish when global oil supply growth appears decimated,” he added.

Recent rebounds in complex refining margins, particularly in Europe and Asia, were also supportive to markets, said Neil Crosby, an analyst at Sparta Commodities. Refining margins at a typical complex refinery in Singapore averaged $3.60 a barrel for June so far, compared with $2.66 a barrel in May.

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