2024-07-29 20:56:20
New York (awp/afp) – Oil prices fell on Monday, with Brent crude oil dropping below 80 dollars, a first since June, weighed down by demand outlooks from China, the world’s largest oil importer, as well as from the United States.
The price of Brent crude oil for September delivery dropped by 1.66% to 79.78 dollars.
Its American equivalent, West Texas Intermediate (WTI) crude for the same month, fell by 1.75% to 75.81 dollars.
Despite a small increase due to fears of a military flare-up between Israel and Hezbollah at the beginning of the session, crude prices were still affected on Monday by “the state of the Chinese industry,” recalls John Evans from PVM Energy.
“This is really the main cause,” noted John Kilduff from Again Capital.
The analyst highlighted signs of a slowdown in the American economy. As the Fed meets on Tuesday and Wednesday, and most investors expect a status quo, there remains the possibility “of a surprise rate cut.” “It’s the view of a minority but it’s in the air because the U.S. economy is slowing down,” said Mr. Kilduff.
The Chinese economy, for its part, has been worrying markets since the publication of growth figures for the second quarter, which saw a significant decline to 4.7% year-on-year.
As the world’s largest oil importer, China is facing a persistent real estate crisis and weak consumption, despite the lifting of COVID-related health restrictions a year and a half ago.
However, prices of both benchmark crudes remained “volatile due to events occurring in the Middle East this weekend,” and concerns about “a new escalation in an already tense conflict for several months,” explain analysts from Energi Danmark.
The geopolitical risk premium had supported prices at the beginning of the session, following a deadly strike in the annexed Golan Heights, attributed by Israel to Lebanese Hezbollah, supported by Iran and allied with Palestinian Hamas.
A rocket strike on Saturday on a football field in the small Druze town of Majdal Shams, in the Golan, a Syrian plateau largely annexed by Israel, killed 12 boys and girls aged ten to sixteen.
The international community has been ramping up efforts to contain a spillover into Lebanon from the war in the Gaza Strip.
afp/rp
Oil Prices Waver Amidst Global Economic Concerns
Oil prices experienced a notable decline on Monday, with Brent crude slipping below $80 per barrel for the first time since June. The price drop reflects growing concerns over demand, particularly from China, the world’s largest oil importer, and signs of a slowdown in the U.S. economy.
The September delivery price for Brent crude dipped by 1.66%, settling at $79.78, while its U.S. counterpart, West Texas Intermediate (WTI), fell 1.75% to $75.81. Analysts point to the weakening state of China’s economy as a primary driver behind this downturn, especially following an alarming growth figure of just 4.7% year-on-year for the second quarter.
Despite some initial price support driven by geopolitical tensions in the Middle East, particularly between Israel and Hezbollah, the market ultimately succumbed to bearish sentiment. A recent deadly attack in Syria, attributed to Hezbollah, added to fears of escalating conflict in an already volatile region.
In the backdrop of these developments, the U.S. Federal Reserve is set to meet to discuss interest rates, with investors largely expecting no changes. However, discussions around a potential surprise rate cut are gaining traction due to indications of economic slowdown in the United States, complicating the overall market landscape.
As China grapples with a persistent real estate crisis and lackluster consumption, having lifted COVID-19 restrictions over a year ago, the outlook for oil demand remains uncertain. This confluence of factors suggests that oil prices may continue to be volatile in the short term, influenced by economic indicators and geopolitical events alike.
With analysts closely monitoring these trends, any significant shifts in oil demand stemming from changes in major economies, particularly China and the U.S., alongside ongoing geopolitical tensions, could shape the future trajectory of oil prices.
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