Oil prices fall amid concerns about weak Chinese demand, tensions in Middle East
Date
8/20/2024 5:56:33 AM
(MENAFN) Oil prices declined during Asian trading on Tuesday as market sentiment was dampened by growing concerns over weak demand from China, the world's largest oil importer. brent crude futures dropped by 13 cents, or 0.2 percent, to USD79.55 per barrel, while West Texas Intermediate (WTI) crude futures fell by the same amount, reaching USD76.52 per barrel. This follows a roughly 2 percent decline for both benchmarks on Friday, as investors reassessed their expectations for demand growth from China. Despite this, oil prices ended last week relatively unchanged, supported by U.S. economic data that showed easing inflation and strong retail spending, which helped offset some of the bearish sentiment.
The ongoing fears surrounding China's slowing economy have been a key driver of the recent sell-off in the oil market. Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities, noted that these concerns are compounded by the impending end of the peak summer driving season in the United States, which typically signals a seasonal drop in oil demand. However, Kikukawa also pointed out that geopolitical tensions in the Middle East, along with the escalating conflict between Russia and Ukraine, continue to pose risks to oil supplies, providing some underlying support to the market.
Recent data from China has highlighted the challenges facing its economy, further fueling worries about declining demand for oil. In July, China's economic momentum slowed significantly, with new home prices falling at the fastest rate in nine years, industrial production decelerating, and unemployment rising. These developments have led to concerns that Chinese refineries, facing weak domestic fuel demand, have sharply reduced their crude processing rates, further contributing to the bearish outlook for oil prices.
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