Down on weak economic data from US, China

World oil prices

Oil prices ended the trading session on May 16 down as weaker-than-expected economic data in China and the United States outweighed the International Energy Agency's (IEA) forecast of higher global demand, Reuters reported.

Brent crude for July delivery fell 32 cents, or 0.43 percent, to $74.91 a barrel. U.S. West Texas Intermediate (WTI) crude fell 25 cents, or 0.35 percent, to $70.86 a barrel.

Both oil benchmarks rose more than 1% in the first trading session of the week, reversing a three-session losing streak.

Weighing on prices on May 16, Chinese data showed industrial output and retail sales growth in the East Asian nation fell short of forecasts in April, suggesting the world’s second-largest economy lost momentum early in the second quarter.

However, China's oil refining throughput in April rose 18.9% year-on-year as refineries maintained high operations to meet recovering domestic fuel demand and stockpiling oil for the summer travel season.

There has been a lot of concern about China's industrial numbers, but if you look at actual demand or refinery activity, you'll see records being broken, said Phil Flynn, an analyst at Price Futures Group.

With refineries stocking up ahead of the northern hemisphere summer travel season, China’s crude imports in May are on track to hit 11 million barrels per day (bpd), compared with 10.67 million bpd in April, according to Refinitiv Oil Research.

Similarly, US data showed retail sales rose less than expected in April, suggesting consumers are feeling the pinch from rising prices and interest rates.

Richmond Federal Reserve Bank President Thomas Barkin said on May 16 that he was "comfortable" with raising interest rates further if that was necessary to reduce inflation.

The IEA raised its forecast for global oil demand this year by 200,000 barrels per day to a record 102 million barrels per day. The agency said China’s recovery from the lifting of Covid-19 restrictions had exceeded expectations, with demand hitting a record 16 million barrels per day in March.

In another upbeat development, the US Department of Energy said a day earlier it would buy 3 million barrels of crude oil for August delivery in a move to begin filling the Strategic Petroleum Reserve (SPR).

The US SPR fell to its lowest level since 1983 after President Joe Biden's administration last year released up to 180 million barrels of oil from the SPR - the largest ever - as part of a strategy to stabilize the soaring oil market.

On May 16, data from the American Petroleum Institute (API) showed that US crude oil reserves increased by about 3.6 million barrels last week.