After falling the previous session due to weaker-than-expected Chinese economic growth, oil prices rose in Asian trade on Tuesday as investors anticipated a probable tightening of US crude supplies.
By 0630 GMT, Brent crude was up 10 cents to $78.60 a barrel, while West Texas Intermediate crude was up 14 cents to $74.29 a barrel.
On Monday, both contracts sank more than 1.5%.
Market players were waiting for industry data later Tuesday, which was expected to reveal that crude oil stockpiles and product inventories in the United States decreased 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.
China’s lackluster GDP figures issued on Monday “kept a cautious lid on prices with some reservations in its demand recovery,” according to Jun Rong Yeap, a market strategist at IG in Singapore.
China’s GDP increased 6.3% year on year in the second quarter, falling short of analyst expectations of 7.3%, as the country’s post-pandemic recovery stalled.
“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.
Nonetheless, the restart of output at two of three Libyan sites that were shut down last week could enhance world supply. A protest against the kidnapping of a former finance minister has halted production.
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 US$71.70 per barrel for WTI,” Wong said.