Investing.com -- Oil prices moved little in Asian trade on Wednesday after strong gains in the prior session, as traders awaited more signals on stimulus spending in major importer China, while official data on U.S. inventories was also due later in the day.
Crude prices rose sharply on Tuesday after Chinese officials said that the government will shortly roll out more policies to support local consumption, as data showed this week that the country’s economy barely grew in the second quarter.
Local media reports also suggested that the world’s largest oil importer will cut interest rates and reserve requirements further in the third quarter to support an economic recovery. But the People’s Bank of China is widely expected to keep its loan prime rate steady on Thursday.
Increased government spending in China could help fish fuel demand from COVID-era lows. China is still expected to drive global oil demand to record highs this year, according to the Organization of Petroleum Exporting Countries.
Brent oil futures fell slightly to $79.64 a barrel, while West Texas Intermediate crude futures retreated to $75.59 a barrel by 20:46 ET (00:46 GMT). Both contracts surged nearly 2% each on Tuesday.
Prices were also supported as Russian ministers reiterated plans to further trim oil exports.
U.S. inventories in focus after last week's bumper build
Markets were now awaiting data on U.S. crude inventories for the week to July 14. Data from the American Petroleum Institute that inventories shrank 0.8 million barrels, after a substantially bigger-than-expected build in the prior week.
Government data from the Energy Information Administration is expected to show that inventories shrank 0.9 million barrels.
Readings on U.S. fuel demand will also be in focus, after data last week showed that demand was declining despite the onset of the travel-heavy summer season. A slew of adverse weather conditions across the country have dented fuel consumption in recent weeks.
Easing inflation, Fed concerns keep oil markets upbeat
Softer-than-expected retail sales data from the U.S. ramped up bets that inflation was easing in the country, which in turn is expected to elicit a less hawkish Federal Reserve in the coming months.
The reading, coupled with weaker-than-expected inflation data for June, spurred bets that the Fed will announce a pause in its rate hike cycle after raising interest rates one last time in July.
This notion weighed heavily on the dollar, which sank to 15-month lows, benefiting commodities priced in the greenback.