LONDON – Oil prices remained steady on Tuesday, lingering near their lowest levels since early June due to ongoing concerns about demand in China, despite the Chinese government’s pledge of policy measures aimed at supporting the economy. This equilibrium comes ahead of potentially significant developments, such as a review by OPEC+ ministers and upcoming U.S. inventory reports.
Key Highlights:
Chinese Demand Concerns:
Disappointing economic data from China, the world’s largest crude importer, has put downward pressure on commodity prices.
China’s manufacturing activity is expected to have contracted for the third consecutive month in July, according to a Reuters poll.
Oil Price Movements:
Brent crude rose by 8 cents, or 0.1%, to $79.86 a barrel by 0805 GMT, after hitting an intraday low of $79.34, the lowest since June 10.
U.S. crude prices fell by 12 cents, or 0.2%, to $75.69.
Market Sentiment:
Tamas Varga from PVM highlighted that macroeconomic factors, particularly Chinese economic conditions and reduced crude oil imports, continue to influence market sentiment.
Chinese Economic Measures:
Despite Chinese leaders’ commitment to bolstering the economy, the anticipated measures have been deemed limited, reiterating existing policy goals from the mid-July Third Plenum meeting.
OPEC+ Meeting:
On Thursday, OPEC+ ministers will meet to review the market, including a plan to begin unwinding some output cuts starting in October. However, no changes are currently expected.
Middle East Tensions:
Oil prices fell by 2% in the previous session after Israel indicated that its response to a rocket strike in the Golan Heights would be measured to avoid escalating tensions in the Middle East.
Venezuelan Political Climate:
In Venezuela, the opposition claimed a significant victory in Sunday’s presidential election, which the national electoral authority awarded to incumbent Nicolas Maduro.
Analysts at ANZ suggested that Maduro’s victory could lead to tighter U.S. sanctions, potentially reducing Venezuela’s oil exports by 100,000-120,000 barrels per day.
U.S. Inventory Reports:
Support for oil prices might come from expected lower crude and fuel stocks in the upcoming U.S. inventory reports due this week.
Overall, oil markets are navigating a complex landscape shaped by macroeconomic concerns, geopolitical tensions, and impending policy reviews, with market participants closely monitoring upcoming developments.
