(Bloomberg) — Oil prices sank on Tuesday as weaker than expected economic data out of China outweighed bullish forecasts from the International Energy Agency.
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West Texas Intermediate traded near $70.80 a barrel, paring some of Monday’s 1.5% gain. The international marker Brent was near $75.
The IEA raised it’s global demand outlook by about 200,000 barrels a day and projected the market to shift to deficit this summer. Nevertheless, data released Tuesday pointed to China’s economy losing momentum, even if the nation’s oil refineries continue processing near record levels of crude — even as some halt for maintenance.
“The focus is more looking in the back mirror rather than ahead,” said Norbert Ruecker, head of economics and next generation research at Julius Baer.
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Oil has declined more than 11% since the start of this year as China’s recovery disappointed some bulls, while the potential for a US recession is denting the demand outlook.
Hedge funds have piled into short bets on ICE Brent futures, although speculators are less bearish on US crude.
The US has solicited bids for as much as 3 million barrels of sour crude for its Strategic Petroleum Reserve, with deliveries planned for August and awards to be announced in June, the Energy Department said Monday. The agency released more than 200 million barrels last year, in part to curb higher prices.
Meanwhile the EU’s top foreign policy representative said in an interview with the Financial Times that member states must take measures against Russian oil flowing into Europe via India.
READ, April 28: Russia Oil Still Powers Europe’s Cars With India’s Help
Russia’s pledged output cuts for crude have yet to be implemented according to the IEA. .
A resurgence of wildfires in Alberta prompted drillers to suspend some output, as officials warned of worsening conditions ahead. In 2016, blazes tore through the Canadian province and shut more than 1 million barrels of production.
Industry data on US inventories are expected later today.
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Read More: Oil Falls as Weak China Data Undermine Bullish Demand Forecasts