Oil prices eased on Monday, with Brent crude holding below $80 per barrel amid concerns about demand from China, the world’s largest oil importer. Data released last week indicated that China’s economy lost momentum in July, with new home prices declining at their fastest rate in nine years. This has led to a significant reduction in crude processing rates among Chinese refineries due to weak fuel demand.
As of 1332 GMT, Brent crude futures were down 19 cents, or 0.2%, at $79.49 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 1 cent to $76.64. Analysts, including Bjarne Schieldrop from SEB, noted that net Chinese imports of crude and petroleum products have been disappointing this year, raising market concerns.
Both Brent and WTI benchmarks experienced nearly a 2% decline last Friday as investors adjusted their expectations regarding Chinese demand growth. Despite these drops, the markets ended the week largely unchanged, supported by U.S. data showing moderating inflation alongside robust retail spending.
Hiroyuki Kikukawa, president of NS Trading, attributed the sell-off to ongoing worries about sluggish demand in China, compounded by the impending end of the peak driving season in the U.S. However, risks to supply from geopolitical tensions in the Middle East and the ongoing conflict in Ukraine continue to provide some support for oil prices.
U.S. Secretary of State Antony Blinken’s recent visit to Tel Aviv aimed at promoting a ceasefire in Gaza has been met with skepticism, as Hamas accused Israel of undermining these efforts. Mediating countries, including Qatar, the U.S., and Egypt, have struggled to reconcile differences in negotiations over the past months.