Oil steadies near seven-week low

July 30, 2024 (MLN): Oil prices hovered close to a seven-week low due to an uncertain demand outlook, particularly from China, the world's largest importer.

Brent crude traded near $79.44 per barrel after losing more than 3% over the previous two sessions.

While West Texas Intermediate crude (WTI) was at $75.42 per barrel.

Both benchmarks slid over 2.7% last week.

Banks including Citigroup Inc. have downgraded their growth forecasts for Asia’s biggest economy, while export prices of US oil heading to the region are also weakening, as Bloomberg reported.

China’s second-half imports are also seen staying weak.

Crude remains modestly higher for the year, aided by OPEC+’s supply cutbacks and expectations for lower borrowing costs in the US.

An interest-rate decision from the Federal Reserve is due on Wednesday, while OPEC+ will hold a monitoring meeting a day later.

The market is split on whether the cartel will proceed with a scheduled output increase next quarter.

Technical indicators are showing the latest move lower has been too quick, with both Brent and WTI now oversold on the nine-day relative strength index, Bloomberg noted.

Traders will look to an industry report on US stockpiles later on Tuesday to see whether they will extend a four-week drop.

“Given China is expected to dominate global demand growth this year, any hiccup in domestic demand will be felt in the global balance,” said Warren Patterson, head of commodities strategy for ING Groep NV. Also, “oil consumption data in recent months has been weak.”

Elsewhere, Venezuela’s opposition said they have proof of voter fraud, and that opposition candidate Edmundo González won Sunday’s election instead of incumbent Nicolás Maduro.

In the Middle East, the US and other world powers are seeking to prevent a conflict between Israel and Hezbollah from escalating into a full-blown war, after a rocket attack that killed a dozen young people in the Israeli-occupied Golan Heights.

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