Oil Prices Ease Amid China Demand Concerns and Focus

Oil prices eased in trading on Monday as concerns about weaker demand in China, the world’s top oil importer, weighed on market sentiment. Investors also focused on the progress of ceasefire talks in the Middle East, which could potentially reduce supply risks.

Market Performance:

Brent crude futures dropped 45 cents, or 0.56%, to $79.23 per barrel by 0646 GMT. U.S. West Texas Intermediate (WTI) crude futures slid 58 cents, or 0.76%, to $76.07 a barrel.

Both benchmarks fell nearly 2% last Friday as investors tempered demand growth expectations from China but ended the week largely unchanged after U.S. data showed moderating inflation and robust retail spending.

Impact of China’s Economic Slowdown:

“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 added that the approaching end of the peak driving season in the United States contributed to the price decline.

Customs data discharged over the weekend showed that China’s diesel and gasoline exports fell sharply in July, reflecting lower crude processing levels due to weak profit margins. Additionally, data on Thursday indicated that China’s economy lost momentum in July, with new home prices falling at the most rapid pace in nine years, industrial output slowing, and unemployment rising.

These developments have stoked worries among traders about a slump in demand from China, where refineries significantly cut crude processing rates last month.

Middle East Ceasefire Talks:

Meanwhile, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday for another Middle East tour to push for a ceasefire in Gaza. However, Hamas cast doubts on the mission by accusing Israel of undermining Blinken’s efforts.

The mediating countries—Qatar, the United States, and Egypt—have failed to narrow the differences enough to reach an agreement in months of on-off negotiations. Violence continued unabated in Gaza on Sunday, adding to the ongoing supply risks in the oil market.