Weak Chinese demand indicators continued to drag oil prices lower on Monday, with the U.S. benchmark set to lose nearly 3% and Brent crude not far behind.
At 9pm ET on Monday, West Texas Intermediate (WTI) was trading down 2.82% at $74.49, while Brent crude was trading down 2.36% at $77.80.
Gaza ceasefire negotiations, which were underway on Monday and were billed as “probably the best, perhaps the last opportunity” to reach a ceasefire agreement, were also seen as putting downward pressure on oil prices.
However, demand from China appears to be the main driver of the oil price decline, with intermittent ceasefire negotiations in Gaza often resulting in very brief and volatile sentiment.
China’s economic data released last week has now been more fully digested by markets. Most worrying are property prices, which are falling faster than at any time in nine years, and the sharp cuts in refinery processing rates in July. The latter is specifically due to weak fuel demand in China. The sentiment in recent days seems to be one of recognition that the Chinese economy will not recover as quickly as anticipated.
Meanwhile, markets will be watching for any further indications that the Fed could still proceed with a rate cut in September, which would in turn boost economic activity. Traders are also keeping an eye on OPEC+’s strategy, with member countries expected to start adding supplies in the next quarter.
2024-08-19 21:02:15