Oil Prices Dip Amid China Demand Concerns
In a continued slide, oil prices dropped on Tuesday, extending losses as worries about demand in China, the world’s largest crude importer, overshadowed concerns about escalating conflict in the Middle East.
Brent crude oil futures slipped by 40 cents, or 0.5 percent, to $79.38 a barrel by 8:40 a.m. Saudi time. Meanwhile, US crude futures were down 43 cents, or 0.6 percent, at $75.38 a barrel.
China Economic Data Adds to Market Jitters
Recent disappointing economic news out of China has rattled markets, with the country’s manufacturing activity expected to have contracted for a third consecutive month in July, according to a Reuters poll.
Citi also slashed China’s growth forecast to 4.8 percent from 5 percent after second-quarter growth fell short of analyst expectations, citing a further softening of economic activity in July.
Market Outlook and Geopolitical Factors
Analyst Emril Jamil from LSEG Oil Research warned of a potential downside in the market due to weak domestic demand from China and the possibility of output increases from some OPEC+ members in the fourth quarter. Tariff tensions with Europe and the US could also impact Chinese crude demand.
While the market awaits a meeting of China’s top decision-making body, the Politburo, this week for possible economic policy support, expectations are tempered following a lackluster outcome from the Third Plenum in mid-July.
Oil prices dropped 2 percent in the previous trading session after Israel indicated a measured response to a Hezbollah rocket strike in the Israeli-occupied Golan Heights. US efforts to limit Israel’s response further eased fears of wider conflict in the Middle East.
Venezuela Election Results Spark Uncertainty
Despite the national electoral authority declaring Nicolas Maduro the winner of the election, Venezuela’s opposition claimed victory with 73 percent of the vote. This outcome could lead to tighter US sanctions, potentially reducing Venezuela’s exports by 100,000-120,000 barrels per day, according to ANZ analysts.
With doubts cast on the election results by governments in Washington and elsewhere, protests erupted across Venezuela on Monday as the country grapples with political uncertainty.