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Oil prices decrease as Chinese crude import sends warning signals

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Experts warn if OPEC does not agree to raise supplies, high oil prices will lead to demand destruction

Oil prices fell earlier this week over future demand concerns after data showed that China’s first-half crude imports dropped, but they were still holding about a one-week high as the concerns about supplies continue, according to media reports. Experts have also warned if OPEC does not agree to raise supplies, a rise in oil prices might lead to demand destruction.

Brent crude oil decreased by 0.1 percent at $76.41 a barrel and West Texas Intermediate showed a drop of 0.2 percent at $75.12 a barrel, having jumped 1.6 percent in the previous session. China’s crude import also fell by 3 percent from January to June compared with a year earlier. This is the first recorded major contraction in oil since 2013 as factors like import quota shortages, refinery maintenance and rising global prices affect the buying process.

Eurasia Group released a statement saying,” Imports were scaled back as surging prices for crude oil have eroded refinery profit margins.” They also mentioned that high oil prices may lead to more cost-sensitive emerging markets, especially India, where there is a surge in oil prices almost every other day.

Additionally, there have also been major disagreements over supply policy within the Organization of the Petroleum Exporting Countries (OPEC). The International Energy Agency also mentioned that global withdrawal from storage in the third quarter was set to be the most in at least a decade. The US stockpile of oil and gas inventories also witnessed a drop last week where crude inventories dropped by 4.1 million barrels for the week ended July 9, signifying their eighth straight weekly fall.

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