Oil futures fall amid weak Chinese demand, hopes of a Middle East ceasefire
Date
7/28/2024 5:31:26 AM
(MENAFN) Oil futures dropped approximately 1.5 percent on Friday, closing the week lower due to weak demand from China and rising optimism for a ceasefire in Gaza, which could alleviate Middle Eastern tensions and related supply concerns. On Friday, brent crude prices fell by USD1.24, or 1.5 percent, settling at USD81.13 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude decreased by USD1.12, or 1.4 percent, to USD77.16 per barrel. Over the week, Brent crude declined by more than 1 percent, while WTI crude saw a drop of over 3 percent.
Initially, the crude oil market received support from better-than-expected U.S. GDP growth data. However, these gains were overshadowed by concerns about weaker Chinese oil demand, as highlighted by George Khoury, head of research and education at CFI. Recent data revealed an 11 percent decrease in China's total fuel oil imports during the first half of the year, fueling worries about the country's future demand. Bob Yawger, director of energy futures at Mizuho in New York, noted that declining Chinese demand is driving crude oil prices downwards. Additionally, the Chinese economy faces the risk of entering a deflationary cycle, which could further lower prices due to reduced demand.
In the U.S., oil demand is anticipated to decrease as refineries prepare to reduce production with the end of the summer vacation season approaching in early September. The market was also influenced by hopes of reaching a ceasefire agreement in the Gaza Strip, which could ease regional tensions and potentially stabilize oil supplies.
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