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Brent crude futures fell $1.26, or 1.6%, to $77.03 per barrel by
1158 GMT. U.S. West Texas Intermediate crude futures (WTI) were
down $1.35, or 1.9%, at $71.05.
Even the ongoing naval and air conflicts in the Red Sea have not
been enough to support oil, despite increased concerns about
tankers having to pause or reroute, increasing shipping costs
and slowing deliveries.
China's economy in the fourth quarter expanded by 5.2%
year-on-year, missing analysts expectations and calling into
question forecasts that see Chinese demand fuelling 2024 global
oil growth.
The economic data "doesn't end the headwinds over crude oil
demand, the Chinese outlook for 2024 and 2025 is still bleak,"
said Priyanka Sachdeva, senior market analyst at Phillip Nova.
"(The) oil industry was backing the notion that despite a bumpy
recovery, oil demand from China has been resilient and will
likely reach record levels in 2024."
Still, China's oil refinery throughput in 2023 rose 9.3% to a
record high, indicating elevated demand even if it lagged some
analysts' expectations.
Other signs of steady Chinese demand have also appeared.
Additionally, the U.S. dollar hovered near a one-month high on
Wednesday after comments from Federal Reserve officials lowered
expectations for aggressive interest rate cuts. A stronger
dollar reduces demand for dollar-denominated oil from buyers
using other currencies.
"Higher rates can lead to a weaker outlook for oil demand as
economic activity tends to cool in a high interest rate
environment, leaving oil prices vulnerable," Sachdeva said.
Also in the U.S., oil refiners are expected to have 1.5 million
barrels per day (bpd) of capacity offline for the week ending
Jan. 19, decreasing available refining capacity by 954,000 bpd,
research company IIR Energy said on Wednesday.
In the Red Sea, tensions remained high as the U.S. on Tuesday
mounted fresh strikes against Iran-aligned Houthi militants in
Yemen after a Houthi missile hit a Greek vessel.
"While oil benchmarks may not reflect the Red Sea attacks, the
realised price for oil and oil products for consumers has
increased given the disruption to trade flows through the Red
Sea and Suez Canal," Vivek Dhar, mining and energy commodities
strategist at the Commonwealth Bank of Australia, wrote in a
note.
(Reporting by Paul Carsten in London and Muyu Xu in Singapore
and Colleen Howe in Beijing; editing by Michael Perry, Jason
Neely and Sohini Goswami)
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