NEW YORK: Oil eased on Monday, with global benchmark Brent holding below $80 a barrel, as concerns over economic troubles in top oil importer China dampened global demand sentiment and offset supply offset risks in the Middle East.
Data from China last week showed the country’s economy lost momentum in July, with new home prices falling at the fastest pace in nine years. Chinese refineries sharply cut crude processing rates last month on tepid fuel demand.
Brent crude futures dropped 52 cents to $79.16 a barrel by 11:35 a.m. EDT (1535 GMT). US West Texas Intermediate crude (WTI) futures were 50 cents lower at $76.15.
“We currently see long-term trends in global oil demand tilting lower with a much softer than expected Chinese economic recovery providing primary impetus in this regard,” said Jim Ritterbusch of Ritterbusch and Associates in Florida.
Both crude benchmarks fell nearly 2% on Friday as investors tempered their Chinese demand growth expectations, but ended the week largely unchanged after US data showed inflation was moderating despite robust retail spending.
“Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, adding that the approaching end of peak driving season in the United States was another factor weighing on prices.
However, supply risks from tensions in the Middle East and escalation of the Russian-Ukraine war are underpinning the market, he said. US Secretary of State Antony Blinken arrived in Tel Aviv on Sunday on another Middle East tour to push for a ceasefire in Gaza, but Hamas raised doubts about the mission by accusing Israel of undermining his efforts.
The mediating countries - Qatar, the United States and Egypt - have so far failed to narrow enough differences to reach an agreement in months of on-off negotiations.
Energy investors also watched for signs of next moves on interest rate cuts by the US Federal Reserve. A slim majority of economists polled by Reuters said they expected that the Fed would cut interest rates by 25 basis points at each of the remaining three meetings this year, one more reduction than predicted last month, and that a recession was unlikely.
Rate cuts could stir economic activity in the world’s top oil-consuming country.
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