Oil falls over 1%, set for weekly drop on China demand fears

By Erwin Seba

HOUSTON (Reuters) -Oil futures fell over 1% on Friday and were on track to end the week lower on declining Chinese demand and hopes of a Gaza ceasefire agreement that could ease Middle East tensions and accompanying supply concerns.

Brent crude was down $1.05, or 1.3%, at $81.32 a barrel by 12:07 p.m. CDT (1707 GMT). West Texas Intermediate crude fell 95 cents, or 1.21%, at $77.33 a barrel.

For the week, Brent was trading down over 1% while WTI fell more than 3%.

“Yesterday’s better-than-expected U.S. GDP growth figures initially supported the crude market,” said George Khoury, global head of education and research at CFI. “However, these gains were overshadowed by concerns about declining Chinese oil demand.”

Data released last week showing that China’s total fuel oil imports dropped 11% in the first half of 2024 have raised concern about the wider demand outlook in China.

“The Chinese demand situation is going down the tubes here and crude oil prices are going down with it,” said Bob Yawger, director of energy futures at Mizuho in New York.

China’s economy is threatening to enter a deflationary cycle, where prices will fall because of falling demand, Yawger said.

“And that is about the worst possible scenario for a country that is the largest importer of crude oil on the planet,” he said.

Meanwhile, demand from the world’s top oil consumer was also expected to ease as U.S. refiners are preparing to cut back production as the end of the summer driving season in early September nears.

The nation’s second largest refiner, Valero Energy (NYSE:VLO), said on Thursday its 14 refineries would run at 92% of combined capacity in the third quarter. Valero’s refineries ran at 94% in the second quarter.

In the Middle East, hopes of a ceasefire in Gaza have been gaining momentum.

A ceasefire has been the subject of negotiations for months, but U.S. officials believe the parties are closer than ever to an agreement for a six-week ceasefire in exchange for the release by Hamas of female, sick, elderly and wounded hostages.

Oil price declines were capped, however, by threats to production from Canadian wildfires, a large U.S. crude stockpile draw and continued hopes of a September cut to U.S. interest rates after strong economic data, said PVM oil analyst Tamas Varga.

This post is originally published on INVESTING.

  • Related Posts

    Oil prices settle up 1% at 2-week high as Ukraine war intensifies

    By Scott DiSavino (Reuters) -Oil prices climbed about 1% to a two-week high on Friday as the intensifying war in Ukraine this week boosted the market’s geopolitical risk premium. Brent…

    COP29 climate summit overruns as $250 billion draft deal stalls

    By Valerie Volcovici and Gloria Dickie BAKU (Reuters) -The COP29 climate summit ran into overtime on Friday, after a draft deal that proposed developed nations take the lead in providing…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Oil prices settle up 1% at 2-week high as Ukraine war intensifies

    • November 22, 2024
    Oil prices settle up 1% at 2-week high as Ukraine war intensifies

    COP29 climate summit overruns as $250 billion draft deal stalls

    • November 22, 2024
    COP29 climate summit overruns as $250 billion draft deal stalls

    SEC Fines Webull, Two Broker-Dealers for Compliance Failures

    • November 22, 2024
    SEC Fines Webull, Two Broker-Dealers for Compliance Failures

    SEC Fines Webull, Two Brokers-Dealers for Compliance Failures

    • November 22, 2024
    SEC Fines Webull, Two Brokers-Dealers for Compliance Failures

    Oil prices climb 1% to two-week high as Ukraine war intensifies

    • November 22, 2024
    Oil prices climb 1% to two-week high as Ukraine war intensifies

    Oil prices edge up to 2-week high as Ukraine war intensifies

    • November 22, 2024
    Oil prices edge up to 2-week high as Ukraine war intensifies