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Oil flat as U.S. output disruption offsets weak China data

Brent oil

Brent crude futures settled 41 cents lower to $77.88 a barrel and U.S. West Texas Intermediate crude futures added 16 cents at $72.56

Oil prices were almost flat on Wednesday as severe cold that disrupted some U.S. oil production offset disappointing economic growth in China that stoked concerns about energy demand.

Brent crude futures settled 41 cents lower to $77.88 a barrel. U.S. West Texas Intermediate crude futures added 16 cents at $72.56.

In North Dakota, a top oil-producing U.S. state, below-zero degrees Fahrenheit temperatures caused oil output there to drop by 650,000 to 700,000 barrels per day (bpd), over half its typical output, the state said.

Those supply concerns caused U.S. crude futures to pare losses late in the session, after earlier dropping by more than $1 a barrel, said Andrew Lipow, president of Lipow Oil Associates.

U.S. domestic crude stockpiles increased last week by 480,000 barrels, as per market sources citing American Petroleum Institute (API) figures on Wednesday.

U.S. government data on inventories is due on Thursday.

Weakening prices on Wednesday, China’s economy in the final quarter expanded by 5.2% year on year, missing analysts expectations and calling into question forecasts that Chinese demand will fuel 2024 global oil growth.

Still, China’s oil refinery throughput in 2023 increased 9.3% to a record high, suggesting elevated demand even if it lagged some analysts’ expectations.

Other signs of stable Chinese demand have also appeared.

The IEA expects oil markets to be in a “comfortable and balanced position” this year, despite Middle East tensions amid an increasing supply and slowing demand growth outlook, its executive director Fatih Birol told the Reuters Global Markets Forum.

An optimistic OPEC stuck to its forecast for comparatively strong growth in global oil demand in 2024. OPEC said that 2025 will bring a “robust” rise in oil use, led by China and the Middle East.

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