Oil prices slide nearly 2% as weak Chinese economy hits demand prospects

Oil prices slid about 2 per cent on Friday, settling almost flat for the week, as concerns over the Chinese economy hit demand prospects despite positive US jobs and consumer data <a href="https://are01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Feconomy%2F2024%2F08%2F08%2Fus-recession-fears-are-overblown-experts-say%2F&data=05%7C02%7Csessaid%40thenationalnews.com%7C4bc500ae744a453f342b08dcbdc8b3c1%7Ce52b6fadc5234ad692ce73ed77e9b253%7C0%7C0%7C638593916942972124%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=b0bOsSS6Ur6wm0%2BJhsIMhclBn8nRGHjmO%2FWFkLGkUEU%3D&reserved=0" target="_blank">lifting investor sentiment . <a href="https://are01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Fenergy%2F2024%2F07%2F21%2Fbrent-wti-price-gap-is-shrinking-raising-us-influence-on-global-oil-markets%2F&data=05%7C02%7Csessaid%40thenationalnews.com%7C4bc500ae744a453f342b08dcbdc8b3c1%7Ce52b6fadc5234ad692ce73ed77e9b253%7C0%7C0%7C638593916942978336%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=zoMnjyso%2FyMqNrFJXnh%2FHTgf7UwcCPumngamnrBYRlk%3D&reserved=0" target="_blank">Brent , the benchmark for two thirds of the world's oil, settled 1.68 per cent lower at $79.68 a barrel. West Texas Intermediate, the gauge that tracks US crude, closed down 1.93 per cent to $76.65 a barrel. Both benchmarks were on pace to post a second straight weekly gain earlier on Friday; instead, Brent eked out a 0.03 per cent, while WTI retreated 0.25 per cent for the week. Crude prices settled higher last Friday after sliding to their lowest levels in seven months a week earlier . Brent has gained 3.43 per cent for the year, while WTI is up about 7 per cent. Oil has been dragged by China, as economic challenges continue to hurt demand from the world's second-biggest consumer of crude. The country is facing challenges with a real estate crisis, sluggish consumer spending and a deceleration in manufacturing. Last month, Chinese refineries lowered crude processing rates as fuel demand remained weak. In addition, Opec and the International Energy Agency this week lowered their oil demand growth forecast, citing weakness in Chinese crude imports . In June, Chinese oil demand contracted for a third straight month, driven by a slump in industrial inputs, including for the petrochemical sector, the Paris-based IEA said. However, oil prices have been supported by renewed optimism in the US, with data on Thursday showing the world's largest economy and biggest consumer of crude is faring better than perceived. The number of Americans applying for unemployment benefits fell last week, with jobless claims declining by about 7,000 to 227,000, the US Department of Labour reported. Meanwhile, US consumer spending, which accounts for about two thirds of the country's economy, rose 1 per cent month-on-month in June, the biggest rise since January 2023, the Department of Commerce said. Car dealerships, groceries, and electronics and appliances retailers have all reported strong sales gains, it said. Both the jobs and retail data are further signs the US economy is performing well, despite high interest rates. The consumer spending data also caused a rally on Wall Street on Thursday, with the S&P 500 index settling 1.6 per cent higher to notch its fourth-best close in 2024. Those reports came after the Department of Commerce reported on Wednesday that US inflation eased to 2.9 per cent in July, the slowest pace in more than three years. That gave investors more optimism for the Federal Reserve to introduce a much-anticipated interest rate cut at its September meeting. And despite fears the US central bank has fallen behind the curve on cutting interest rates – it held steady last week – some economists believe fears of a looming recession are an overreaction . “The encouraging economic data … gave hope to investors that the US economy won’t collapse, revived the hope of seeing the US economy soft-land and eased the jumbo rate-hike bets for the Federal Reserve’s September meeting,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note on Friday. Oil prices, however, are being dragged by geopolitical tension in the Middle East. A new round of Gaza ceasefire negotiations started on Thursday and are expected to resume in Qatar on Friday. “Lingering geopolitical risk is also helping to keep a floor under crude prices … likely denting the appetite of participants to take on significant short positions,” Michael Brown, a senior research strategist at broker Pepperstone, said on Friday. “Nevertheless, geopolitical risk premium can only underpin crude for so long, with a sustained rally in both Brent and WTI likely requiring a significant, and synchronised, pickup in global demand, which remains elusive.”

Oil prices slide nearly 2% as weak Chinese economy hits demand prospects

Crude misses out on second straight weekly gain despite positive economic data from the US