By Laura Sanicola
(Reuters) -Oil prices settled lower on Tuesday as investors remained focused on the likelihood that China’s economic malaise will keep hobbling demand from the world’s top crude importer.
Brent crude settled down 43 cents, or 0.5% at $84.03 a barrel while the more active U.S. West Texas Intermediate October contract slipped 48 cents to $79.64.
The front-month WTI contract settled down 37 cents at $80.35 a barrel on very limited volume ahead of its imminent expiry.
China, the world’s second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its sluggish economic activity has frustrated markets as pledged stimulus has fallen short of expectations, including a smaller than expected cut in a key lending benchmark on Monday.
“Saudi and Russian output cuts have been largely negated by weakening crude demand from China that appeared to develop last month and is apt to continue through the rest of the summer,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.
Amplifying demand concerns, U.S. central bank officials have not ruled out further interest rate hikes to contain inflation.
The U.S. continued to draw crude stocks, which dropped by about 2.4 million barrels in the week ended Aug. 18, according to market sources citing American Petroleum Institute figures on Tuesday. [API/S]
The Iraqi and Turkish oil ministers have discussed the importance of resuming oil flows after finalising pipeline maintenance, the Iraqi state news agency reported, a development that could boost global supply.
Turkey had halted Iraq’s 450,000 barrels per day (bpd) of exports – roughly 0.5% of global supply – through the northern Iraq-Turkey pipeline in March after an International Chamber of Commerce arbitration ruling.
“Such an export resumption could add almost a half a million barrels per day to global oil supply in making a significant dent in Saudi Arabia’s additional production cut that is expected to extend through next month,” said Ritterbusch.
Separately on Monday, Shell said it was investigating a possible leak on the 180,000 bpd Trans Niger oil pipeline, though no force majeure has been declared.
(Additional reporting by Natalie Grover and Paul Carsten in London, Muyu Xu in Singapore and Katya Golubkova in Tokyo; Editing by Tomasz Janowski, David Evans, David Goodman, David Gregorio and Cynthia Osterman)