Oil prices dipped in early trading on Monday, reflecting concerns about weakening demand in China, the world’s largest oil importer. The market’s sentiment was also influenced by the ongoing ceasefire talks in the Middle East, which could potentially alleviate supply concerns.Â
Brent crude futures declined by 13 cents, or 0.2 percent, to $79.55 per barrel at 00:32 GMT. Similarly, U.S. West Texas Intermediate crude futures dropped by 13 cents, or 0.2 percent, settling at $76.52 a barrel.Â
Last Friday, both benchmarks experienced a near 2 percent decline as investors adjusted their expectations for demand growth from China. However, the week concluded with prices largely unchanged from the previous week, following a series of U.S. economic data releases last week. These reports indicated a moderation in inflation and robust retail spending.
“Persistent worries about sluggish demand in China prompted a sell-off,” explained Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities. He added that the approaching end of the peak driving season in the United States also contributed to the downward pressure.
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“Despite the demand concerns, tensions in the Middle East and the intensifying Russian-Ukrainian conflict, which pose supply risks, are providing support to the market,” Kikukawa stated.
On Thursday, China released economic data revealing a slowdown in its economy during July. New home prices experienced their steepest decline in nine years, while industrial output slowed and unemployment rose. This data has fueled anxieties among traders about a potential slump in demand from China, where refineries significantly reduced crude processing rates last month due to weak fuel demand.
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