Oil prices inched upwards in Asian trade on Tuesday as investors eyed a possible tightening of U.S. crude supplies, after sinking in the previous session on weaker-than-expected Chinese economic growth.
Brent crude was up 10 cents at $78.60 a barrel by 0630 GMT, while U.S. West Texas Intermediate crude rose 14 cents to $74.29 a barrel.
Both contracts fell more than 1.5 percent on Monday.
Market participants were awaiting industry data later on Tuesday that is expected to show U.S. crude oil stockpiles and product inventories fell last week.
Four analysts polled by Reuters estimated on average that U.S. crude inventories fell by about 2.3 million barrels in the week to July 14.
Lackluster gross domestic product (GDP) data from China released on Monday “kept a cautious lid on prices with some reservations in its demand recovery,” said Jun Rong Yeap, a market strategist at IG in Singapore.
China’s GDP grew 6.3 percent year-on-year in the second quarter, compared with analyst forecasts of 7.3 percent, as its post-pandemic recovery lost momentum.
“Nevertheless, some traction from buyers has emerged lately, with prices breaking above its near-term consolidation pattern last week which may suggest some exhaustion in selling pressure, following the downbeat sentiments over the past one year,” Yeap added.
Meanwhile, U.S. shale oil production is projected to fall to nearly 9.40 million barrels per day in August, which would be the first monthly decline since December 2022, data from the Energy Information Administration showed on Monday.
Still, global supplies could see a boost from the resumption of output at two of three Libyan fields that were shut last week. Output had been halted by a protest against the abduction of a former finance minister.
The combination of demand-side concerns with potentially bullish supply tightening meant that prices were “likely to be in a sideways range in the short-term,” said Kelvin Wong, a senior market analyst at OANDA.
“The floor is likely to be at the 50-day moving average (which is) now acting as a key near-term support at $71.70 per barrel for WTI,” Wong said.