Oil retreats on dimmed demand outlook after China, US data

Oil futures retreated on Tuesday as weaker-than-expected economic data in China and the United States counterbalanced a forecast of higher global demand from the International Energy Agency.

Brent crude futures settled 32 cents lower to $74.91 a barrel and US crude edged down 25 cents to $70.86. Chinese data showed industrial output and retail sales growth undershot forecasts in April, suggesting the world’s second-largest economy lost momentum at the start of the second quarter. However, an 18.9% year-on-year rise in China’s oil refinery throughput in April to the second-highest level on record helped to keep a floor under crude prices.

With refiners building stockpiles ahead of the summer travel season in the northern hemisphere, crude imports by China in May are moving towards 11 million barrels per day, versus 10.67 million bpd in April. China’s June refinery intake is expected to grow by 1.5% month on month, while US retail sales increased less than expected in April, pointing to consumers feeling the pinch from rising prices and interest rates.

The International Energy Agency raised its forecast for global oil demand this year by 200,000 bpd to a record 102 million bpd. The U.S. Department of Energy on Monday said it would buy 3 million barrels of crude oil for delivery in August in a move to begin refilling the Strategic Petroleum Reserve.

Additionally, widespread fires in the Canadian province of Alberta have shuttered at least 319,000 barrels of oil equivalent per day, representing 3.7% of Canada’s production. Global crude supplies could also tighten in the second half of the year as the Organization of the Petroleum Exporting Countries and allies including Russia implement additional output cuts.