Oil Prices Record Third Consecutive Weekly Loss on Weak Chinese Demand Data
Brent crude settled near $81 per barrel as market participants weigh robust US economic growth against a significant slowdown in Chinese industrial activity.
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Global energy markets concluded the final full trading week of July on a bearish note, with Brent crude and West Texas Intermediate (WTI) both recording their third consecutive weekly declines. On Friday, July 26, 2024, Brent crude futures settled at $81.13 per barrel, down approximately 1.5% on the day. WTI followed suit, closing at $77.16 per barrel. The primary driver for this downward trajectory remains the persistent concern over demand from China, the world’s largest crude importer.
Recent data from the Chinese National Bureau of Statistics revealed a cooling manufacturing sector and lower-than-expected refinery throughput. Specifically, Chinese oil imports have fallen by nearly 11% year-over-year in the first half of 2024, a figure that has significantly offset the bullish sentiment typically generated by the US summer driving season. Although the US economy showed a surprise 2.8% growth in the second quarter, energy traders are increasingly looking at global macro indicators that suggest a broader slowdown.
Adding to the downward pressure is the anticipation of the upcoming OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for early August. While the group is currently implementing output cuts of 2.2 million barrels per day, there is growing speculation regarding the timeline for phasing out these voluntary reductions. Current market conditions, characterized by high inventory levels in some regions and tepid demand in Asia, may force the alliance to reconsider its plans to increase production in the fourth quarter of 2024.
In the United States, despite a large inventory draw reported by the EIA earlier in the week, gasoline demand has not reached the peak levels seen in previous record-breaking summers. Refiners are operating at high capacities, but the supply-side cushion remains sufficient to prevent a price spike. For investors, the $80 mark for Brent remains a critical psychological and technical support level. A breach below this threshold could trigger further algorithmic selling, potentially pushing prices toward the mid-$70s if Chinese economic stimulus measures fail to materialize or show efficacy.
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