Oil prices declined in early Asian trading on Monday, influenced by concerns over weaker demand in China, the world’s largest oil importer. Market sentiment was also affected by investor attention on the progress of ceasefire talks in the Middle East, which could potentially lower supply risks.
By 0032 GMT, Brent crude futures fell by 13 cents, or 0.2%, to $79.55 per barrel, while U.S. West Texas Intermediate (WTI) crude futures also decreased by 13 cents, or 0.2%, to $76.52 per barrel.
“Crude oil futures continue to see high price swings and are currently down 0.5%, as focus remains on developments in the middle-east conflict and the progress of ceasefire talks. Also in focus will be China’s prime loan rate decision on Tuesday and the weekly oil inventory data on Wednesday,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
What’s weighing on crude oil prices?
Both benchmarks dropped by nearly 2% last Friday as investors scaled back their expectations for demand growth from China. However, they ended the week relatively flat compared to the previous week, thanks to U.S. data indicating moderating inflation and strong retail spending.
On Thursday, data from China indicated a slowdown in its economy in July, with new home prices dropping at the fastest rate in nine years, a decline in industrial output, and rising unemployment.
This has heightened concerns among traders about reduced demand from China, where refineries significantly lowered crude processing rates last month due to weak fuel demand.
Meanwhile, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday for another Middle East tour aimed at securing a ceasefire in Gaza. However, Hamas cast doubt on his mission by accusing Israel of undermining his efforts. Despite months of intermittent negotiations, mediating countries—Qatar, the United States, and Egypt—have yet to bridge enough differences to reach an agreement, and the violence in Gaza continued on Sunday.