Oil Prices Ease on Signs of Weakening Demand in China
In the world of oil prices, things are getting interesting. Global benchmark Brent is hanging out near a one-month low, thanks to indications of weakening demand in China. But hold on, there’s a twist – US oil stockpiles are actually on the decline, which is keeping losses in check. According to Reuters, this is what’s happening in the oil market right now.
Brent Crude Takes a Hit
Brent crude oil futures have dropped by 0.2 percent, landing at $83.58 a barrel. Meanwhile, US West Texas Intermediate crude futures are down 0.2 percent as well, sitting at $80.63. This marks a few consecutive sessions of decline, with Brent hitting as low as $83.30 on Tuesday – the lowest it’s been since June 17.
Chinese Demand Concerns vs. US Inventory Drawdown
Investors are feeling the weight of worries about Chinese demand, but fear not – the drawdown in US inventories is here to save the day. Priyanka Sachdeva, senior market analyst at Phillip Nova in Singapore, notes that the healthy US economy and steady retail data are helping to balance out concerns about a slowdown in economic growth and oil demand.
Geopolitical Risks and a Stronger Dollar
On top of all this, a stronger US dollar is also putting pressure on oil prices. ANZ Bank analyst Daniel Hynes explains that the dollar index has been climbing for three days straight, making oil more expensive for investors holding other currencies. And let’s not forget about rising geopolitical risks, which are playing a role in limiting oil price declines.
US Inventory Data and Economic Growth
In the US, crude oil inventories have dropped by 4.4 million barrels, according to market sources citing data from the American Petroleum Institute. This is a significant decrease compared to analysts’ estimates of a mere 33,000 barrel drop. Additionally, retail sales in June remained unchanged, showing consumer resilience and boosting economic growth prospects for the second quarter.
Yemen’s Houthis Attack Oil Tanker
As if things weren’t already intense, a Liberia-flagged oil tanker was attacked by Yemen’s Houthis in the Red Sea. The tanker is currently assessing the damage and investigating a potential oil spill, as reported by the Red Sea and Gulf of Aden Joint Maritime Information Center on Tuesday.