Oil prices saw an uptick of nearly 1%, driven by a larger-than-anticipated decline in U.S. crude inventories and a weakening US dollar, which makes dollar-denominated oil cheaper for holders of other currencies.

This rise came despite growing concerns about an economic slowdown in China, the world’s largest oil importer. Brent crude futures climbed 1.2% to 84.69 per barrel, while West Texas Intermediate crude futures rose 1.7% to $82.12 per barrel.

However, both benchmarks remain near their lowest settlement levels since June, highlighting the uncertainty gripping the market. The price differential between Brent and WTI crude narrowed to its lowest point since October, shrinking to $3.82 per barrel.

This narrowing spread suggests potential shifts in global supply and demand dynamics. Adding to the market’s volatility, the U.S. Energy Information Administration reported a drawdown of 4.9 million barrels of crude from inventories in the week ending July 12, exceeding analysts’ expectations and further tightening the supply picture.

Meanwhile, official data revealed that China’s economic growth slowed to 4.7% in the second quarter of 2024, its weakest performance since early 2023. This slowdown raises concerns about future oil demand, potentially capping further price increases.