Oil prices traded at their lowest since early June on Tuesday, July 30, as concerns about Chinese demand offset the prospect of falling U.S. crude and product inventories.
Brent crude fell 77 cents, or 0.97%, to $79.01 a barrel. U.S. West Texas Intermediate (WTI) crude fell 66 cents, or 0.87%, to $75.15. At their intraday lows, both contracts were down more than a dollar. The nearest-month Brent crude was trading at $78.67 and WTI at $74.75, both benchmarks trading at their lowest since June 6.
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A string of disappointing economic news from China, the world’s biggest oil importer, has weighed on commodity prices. A Reuters survey showed Chinese manufacturing activity is expected to contract for a third straight month in July.
“Weakening global demand growth, an uncertain economic outlook for China and still-high global oil inventories continue to weigh on prices,” Claudio Galimberti, head of oil company Rystad Energy, said.
Although China’s leadership has vowed to step up support for the economy, expectations are limited as to the scope of such measures, as the policy meeting of the Third Plenary Session of the 19th Central Committee of the Communist Party of China largely reiterated existing economic policy goals.
Top ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia are meeting next Thursday to review the market, including plans to start lifting some production cuts from October. No changes are currently expected.
Oil prices fell 2% in the previous trading session after Israel indicated it would respond to Saturday’s rocket attack in the occupied Golan Heights in a way that was calculated to avoid plunging the Middle East into all-out war.
In OPEC-member Venezuela, the opposition said it won 73% of the vote in Sunday’s presidential election, even as the national electoral authority declared incumbent Nicolas Maduro the winner.
“The victory of Nicolas Maduro in Venezuela’s latest elections could lead to tougher US sanctions, a headwind for global supply,” ANZ analysts said in a note, estimating that such a scenario could see Venezuelan exports fall by 100,000 to 120,000 barrels per day.
U.S. inventory reports due this week are expected to show a decline in crude oil and fuel stocks, which could provide some support.
