Oil Prices Slip in Asian Trading Amid Weaker US Consumer Demand
In the bustling city of New Delhi, oil prices took a dip in Asian trading on Monday following a survey that revealed weaker US consumer demand. As May crude production surged in China, the world’s largest crude importer, the global benchmark Brent crude futures for August delivery saw a decrease of 40 cents, or 0.5 percent, landing at $82.22 per barrel at 9:31 a.m. Saudi time. Similarly, US West Texas Intermediate crude futures for July delivery fell 36 cents to $78.09 a barrel.
The more-active August delivery WTI contract also experienced a slip of 0.5 percent to $77.7 per barrel. This decline came after prices fell on Friday in response to a survey indicating that US consumer sentiment had dropped to a seven-month low in June, with households expressing concerns about their personal finances and inflation.
Despite the recent setbacks, both benchmark contracts managed to secure nearly a 4 percent gain last week, marking the highest weekly rise in percentage terms since April, fueled by signs of stronger fuel demand.
Market analyst Tony Sycamore from IG in Singapore commented, “Last week’s robust rally was fueled by forecasts of strong 2024 demand from OPEC+ and the IEA. However, given OPEC’s vested interest in crude oil, there is some skepticism around OPEC’s forecasts. Friday’s soft US consumer confidence numbers suggest that the resilience of the American consumer and the US economy will be tested as households run down their savings to combat higher interest rates and cost-of-living pressures.”
Meanwhile, China reported a 0.6 percent year-on-year increase in domestic crude oil production in May, reaching 18.15 million tonnes. Year-to-date output stood at 89.1 million tonnes, up 1.8 percent from the previous year. National crude oil throughput in May dropped 1.8 percent compared to the same period last year, totaling 60.52 million tonnes, with year-to-date figures at 301.77 million tonnes, reflecting a 0.3 percent increase from a year ago.
Amidst these developments, China’s May industrial output fell short of expectations, and the slowdown in the property sector showed no signs of easing, placing pressure on Beijing to bolster growth. The data released on Monday painted a largely pessimistic picture, highlighting a turbulent recovery for the world’s second-largest economy.
On the geopolitical front, concerns about a potential wider Middle East conflict lingered after the Israeli military warned that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could lead to a serious escalation. Following a series of exchanges over the past week, Sunday saw a noticeable decrease in Hezbollah fire, while the Israeli military conducted several airstrikes against the group in southern Lebanon.
As markets in key oil trading hub Singapore and other countries in the region remained closed for a public holiday on Monday, the global oil market braced itself for further fluctuations and developments in the days ahead.