Oil prices have fallen as a result of worse economic indicators from China and Japan
Oil prices have fallen as a result of worse economic indicators from China and Japan

(Source: Reuters) Oil prices fell on Wednesday, giving up earlier gains, as China and Japan released dismal economic data, raising fears about global growth and oil consumption.

At 0501 GMT, Brent crude prices were down 34 cents, or 0.3 percent, to $104.30 a barrel, while WTI crude futures were down 46 cents, or 0.5 percent, to $100.14 a barrel. In the previous session, both contracts had risen by more than 6%.

China's crude oil imports fell 14% year on year, extending a two-month decline, as tough efforts to contain the spread of COVID-19 damaged demand in the world's largest crude importer.

Last month, the world's largest crude oil consumer imported 42.71 million tonnes, or 10.06 million barrels per day, according to data released by the General Administration of Customs on Wednesday.

On Tuesday, oil prices rose as news of a partial loosening of parts of China's rigid COVID-19 restrictions fueled bullish optimism among market participants.

According to OANDA senior market analyst Jeffrey Halley, Asia is less optimistic about China's COVID position than other markets.

Shanghai, China's largest city, warned on Wednesday that anyone who breaks the COVID-19 lockdown laws will face severe consequences, while also mobilising residents to protect their city as the number of new instances surpassed 25,000.

Japan reported its worst monthly loss in core machinery orders in nearly two years in February on Wednesday, led down by a sharp drop in demand from IT and other service industries.

Despite this, dropping Russian oil and gas condensate production is supporting oil prices, and OPEC has cautioned that replacing future supply losses from Russia will be impossible.

On March, Russian Premier Vladimir Putin chastised Ukraine for failing to hold peace negotiations and declared that Moscow will continue its "special operation" to disarm its western neighbour.

"Statements from Vladimir Putin that negotiations with Ukraine have come to a halt, as well as remarks from President Biden accusing Russia of genocide, reinforce the fact that the Ukraine-Russia situation is unlikely to deescalate anytime soon - another reason to expect that the downside for oil prices is limited," Halley said.

According to market sources quoting American Petroleum Institute numbers released on Tuesday, oil stocks surged considerably last week while distillate and gasoline inventories fell.

The 7.8 million barrel increase in oil stocks published by API for the week ending April 8 is more than the 900,000 barrel increase predicted in a Reuters poll. [API/S] [EIA/S]

On Wednesday at 10:30 a.m. EDT (1430 GMT), the Energy Information Administration (EIA) will issue weekly data.