Oil prices drop on China growth worries

July 19, 2024 (MLN): Oil edged lower on Friday due to concerns that Chinese growth may slow, while OPEC+ appears to still be on track to loosen supply curbs later this year.

Brent crude fell 0.5% to $84.68 per barrel, while West Texas Intermediate crude (WTI) was at $80.72 per barrel.

The end of China’s Third Plenum this week brought few signs that the top leadership is preparing to unleash major steps to boost demand or arrest the nation’s property slump, as Bloomberg reported.

OPEC+ delegates, meanwhile, expect a monitoring session next month to be routine, making no changes to plans for a supply hike starting in the fourth quarter.

The group, led by Saudi Arabia and Russia, agreed last month to begin restoring roughly 2.2 million barrels a day of halted output from October.

Crude is still higher this year, aided by OPEC+ supply restraint, a recent decline in US stockpiles, and expectations for lower interest rates from the Federal Reserve.

In the near term, traders are also tracking wildfires in Canada that have threatened some supply and supported prompt pricing.

“The oil market is once again relatively rangebound,” said Warren Patterson, head of commodities strategy for ING Groep NV.

“Growing Chinese demand concerns are capping the market, following a raft of data earlier this week suggesting a softer demand picture,” while supply issues in Canada and expectations of tighter balances this quarter are limiting losses, he said.

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