Brent oil dips below $80 amid concerns over waning demand

(Bloomberg) — Oil fell to a seven-week low on doubts about the strength of global demand as investors looked to the OPEC+ meeting for guidance on supply.

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Global benchmark Brent crude fell below $80 for the first time since early June, while West Texas Intermediate fell below $76 a barrel.

Sentiment in the oil market was subdued recently after China reported its weakest economic growth in five quarters earlier this month. The volume of the nation’s oil imports fell as the return of refineries from maintenance continued at a slow pace. Commodity trading advisors also shed bullish positions after futures fell below key support levels.

Downbeat sentiment overwhelms an emergence of geopolitical risks. Israel attacked Hezbollah targets on Sunday and threatened further retaliation for an earlier rocket strike that killed 12 children. Elsewhere, Secretary of State Anthony Blinken said the US had “serious concerns” about the outcome of Venezuela’s election after Nicolas Maduro was re-elected president of the OPEC member for another six years.

Key members of the Organization of the Petroleum Exporting Countries and its allies will hold an online monitoring meeting on Thursday, and delegates said they were unlikely to make recommendations on tentative plans to start restoring production in the fourth quarter. The market is divided if the cartel continues with the planned production increase.

Crude oil prices are modestly higher this year, helped by OPEC+ supply discipline and expectations that the Federal Reserve is moving closer to reducing borrowing costs. An interest rate decision from the US central bank is due on Wednesday. However, prices have remained capped for several months.

“Oil prices have been trading in a narrowing range or triangular pattern for over a year,” Bank of America analyst Paul Ciana wrote in a note. “Perhaps some disappearance of the macro risk premium, global demand and/or hope of reduced supply is on the horizon and prompts a breakdown in oil to $63.02” by the end of 2024.

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