Oil prices fall in early Asian trading as concerns over China’s demand weigh on the market. Investors focus on ceasefire talks in the Middle East that could reduce supply risks.
Bollywood Fever: Oil prices edged lower in early Asian trading on Monday as concerns over weaker demand in China, the world’s top oil importer, dampened market sentiment.Â
Investors are also closely watching the progress of ceasefire talks in the Middle East, which could alleviate some of the supply risks in the market.
By 0032 GMT, Brent crude futures had decreased by 13 cents, or 0.2%, to $79.55 per barrel, while U.S. West Texas Intermediate crude futures also fell by 13 cents, or 0.2%, to $76.52 a barrel.
The decline follows a nearly 2% drop in both benchmarks last Friday as investors reassessed the potential for demand growth from China.
Despite this, the benchmarks ended the week largely unchanged after U.S. data indicated moderating inflation and robust retail spending.
“Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
He also noted that the approaching end of the peak driving season in the United States contributed to the downward pressure.
However, he added that “tensions in the Middle East and the escalation of the Russian-Ukraine war, which pose supply risks, are underpinning the market.”
The market’s focus on China intensified after recent data showed that the country’s economy lost momentum in July, with new home prices falling at the fastest rate in nine years, industrial output slowing, and unemployment rising.
This has fueled concerns about a decline in demand from China, where refineries significantly reduced crude processing rates last month due to weak fuel demand.
Meanwhile, in the Middle East, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday for another tour aimed at pushing for a ceasefire in Gaza.
However, Hamas cast doubt on the mission’s success, accusing Israel of undermining the efforts.
The mediating countries—Qatar, the United States, and Egypt—have struggled to bridge the gaps in months of on-off negotiations, and violence in Gaza continued on Sunday.
These geopolitical factors, coupled with economic concerns, are likely to keep oil markets volatile in the near term.
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