Oil prices remain vulnerable to fluctuations in demand

• Weak output data from Europe, Asia and the US signaled a slowdown in global oil demand.
• The downward revision of new jobs by the US Labor Department further fueled concerns about demand.
• Despite ongoing geopolitical tensions, oil prices continue to fall due to prevailing pessimism about demand.

Crude oil prices were set for another loss this week as pessimism on demand continues to pressure traders to sell, alleviating supply concerns.

Brent crude and West Texas Intermediate the trend rose earlier in the day but was set to end the week lower than it started amid the weight of economic reports pointing to lower global oil demand.

Manufacturing data from key markets in Europe, Asia and the US have shown a slowdown in product demand, which by extension translates into lower energy demand. In the US, the Purchasing Managers’ Index fell in July to its lowest level in eight months. In the Eurozone, the latest PMI reading extended the two-year contractionary trend. In China, the PMI fell below 50 – the growth threshold – last month.

In addition to this disappointing data, the US Labor Department had to make a drastic revision to the number of new jobs added in the 12 months to March, as it turned out that new job additions were more than 800,000 fewer than previously estimated, fueling concern. about the demand of the world’s largest oil consumer.

“Upbeat fundamentals continue to play second fiddle to weakening sentiment, with the oil market unable to shake its recent bearish tendencies,” energy consultancy FGE said, as quoted by Reuters.

“Concerns about weaker demand continue to be the main driver for the market at the moment. Downward price pressure makes it increasingly likely that OPEC+ will have to abandon plans to gradually increase supply from October,” ING analysts. said in a note.

The oil price war premium remains in place, however, as the ceasefire talks prove as challenging as could reasonably be expected to be. In a recent updateReuters cited about a dozen anonymous sources as saying that Israel’s demand to keep troops in Gaza after the cease-fire was the latest obstacle to a successful conclusion of the talks.

By Irina Slav for Oilprice.com

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