oil

Oil plunges on demand jitters amid weak Chinese data

On Monday, crude oil prices edged down, dragged by demand concerns after top importer China issued disappointing manufacturing growth. The US West Texas Intermediate futures declined 1.78% to $96.81 per barrel.

Then, the Brent crude contracts skidded by 1.17% to $102.75 per barrel. Experts also explained that a break below $102.68 could trigger a drop from $99.52 to $101.26.

Subsequently, the world’s largest crude oil importer reported a slowing manufacturing purchasing managers’ index. In July, the PMI figure eased to 50.40 from 51.70 in the previous month, well below market consensus. This downturn snuffed out a brief recovery in June, reflecting the impact of fresh coronavirus restrictions.

At the same time, Japanese manufacturing activity expanded at its weakest rate in the last ten months.

Accordingly, both crude oil benchmarks closed July with their second straight monthly losses for the first time since 2020. The downturn came as soaring inflation and higher interest rates triggered recession fears that would erode fuel demand.

Moreover, analysts explained that British oil sales posted a downtrend, while gasoline demand remained below its five-year average for this year. As a result, they reduced their forecast for 2022 average Brent prices to $105.75 a barrel. Eventually, their estimate for WTI declined to $101.28.

Oil traders focus on OPEC+ meeting

Oil traders now kept an eye close to the meeting of the Organization of the Petroleum Exporting Countries and allies. The discussion would start on Wednesday to decide on September output.

Previously, two of eight OPEC+ sources noted the possibility of a modest increase for September. But, on the other hand, the rest said output would likely remain steady.

Subsequently, the start of August sees the oil cartel fully unwound record output cuts in place since 2020.

Meanwhile, the group’s new secretary general, Haitham al-Ghais, reiterated the importance of Russia’s membership in OPEC+.

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