Oil prices slip lower on weak Chinese PMI data, lower U.S. inventories

Investing.com--Oil prices slipped slightly Thursday, weighed by weak Chinese economic data and a surprise build in U.S. crude stocks. 

At 08:30 ET (12:30 GMT), Brent oil futures for September slipped 0.7% to $71.96 a barrel, while West Texas Intermediate crude futures fell 0.5% to $69.63 a barrel.

Both benchmarks registered 1% gains on Wednesday.

Weak Chinese PMI data 

Data released earlier Thursday showed that China’s manufacturing PMI shrank more than expected in July, amid disruptions from extreme weather and U.S. trade tariffs.

Non-manufacturing PMI also underwhelmed, with overall business activity in the country barely expanding in July.

The reading ramped up concerns over weak economic activity in the world’s biggest oil importer, which could in turn hurt its appetite for crude. 

Thursday’s PMI data also showed initial support from Beijing’s stimulus measures was now running dry, necessitating more support. China’s Politburo signaled this week that it will dole out more stimulus in the coming months. 

U.S. crude inventories rise 

Elsewhere, U.S. crude oil inventories rose by 7.7 million barrels to 426.7 million barrels in the week ending July 25, driven by lower exports, the Energy Information Administration said on Wednesday. Analysts had expected a draw of 1.3 million barrels. 

Gasoline stocks fell by 2.7 million barrels to 228.4 million barrels, far exceeding forecasts for a draw of 600,000 barrels.​ 

"Overall, the release was negative for the market, with total crude and product stocks rising to their highest levels since October 2024," said analysts at ING, in a note.

Trump threatens secondary tariffs on Russia 

However, these losses come after a generally positive week, with earlier gains spurred chiefly by U.S. President Donald Trump threatening to impose steep tariffs on major buyers of Russian crude, in a bid to pressure Moscow into ending its war against Ukraine. 

Trump said he will impose more restrictions on Russia’s oil, while imposing 100% secondary tariffs on buyers of Russian crude. China and India are among the biggest buyers of Russian oil.

Trump also said on Wednesday said India will face 25% tariffs on all its U.S. exports, in addition to an unspecified penalty, over its dealings with Russia. The duty will take effect from August 1. 

"The U.S. and India have struggled to come to a trade deal before Friday’s deadline. It’s still unclear how big a penalty India faces (the original threat was for a secondary tariff of 100%). This is causing plenty of uncertainty for Indian refiners, as well as the broader market, as to whether they can continue to import Russian oil," said ING, in a note.

Trump also warned China against buying Russian oil.

In addition to Russia, U.S. officials also announced fresh sanctions on entities linked to Iran’s oil industry. Markets feared that more U.S. restrictions on Russia and Iran, which are both major global oil producers, will limit overall supplies. 

Investors’ attention is also focused on ongoing U.S. trade negotiations and an August 1 tariff deadline. The market anticipates new tariffs from the administration of U.S. President Donald Trump could dampen global growth and in turn, oil demand.

Ambar Warrick contributed to this article