Oil prices fall on weak economic data from China

Crude oil prices started this week lower after a series of economic reports from China late last week suggested weakening oil demand.

These included new home prices, which fell noticeably, industrial production, which appeared to be slowing, and rising unemployment figures. The reports pushed the benchmarks to a weekly loss, despite expectations for a gain, and the loss extended into this week.

On the bright side, the situation in the Middle East remains a major factor, as does the escalation between Russia and Ukraine after the latter made a foray into Russian territory.

“Lingering concerns about sluggish demand in China led to sales,” Nissan Securities analyst Hiroyuki Kikukawa said. said Reuters. “However, tensions in the Middle East and the escalation of the Russian-Ukrainian war, which pose supply risks, underpin the market,” Kikukawa added.

“Short-term volatility is likely to remain high as markets remain on alert for a potential Iranian response,” said Han Zhong Liang, investment strategist at Standard Chartered. said Bloomberg. He added that “the longevity of the geopolitical risk premium depends on whether there is a real impact on the supply-demand balance.”

US Secretary of State yesterday COME to Israel to seek a cease-fire agreement between Tel Aviv and Hamas, but the latter, according to Reuters, has shown doubts about the success of Anthony Blinken’s mission, accusing Israel of undermining mediation efforts.

Despite geopolitical premiums, chances are oil price pressure will increase after China’s customs administration reported gasoline exports in July fell more than 35% due to weaker profit margins in the refining sector.

China exported 5.77 million barrels per day of gasoline last month, for a total of 790,000 tons. That is down from 1.22 million tonnes a year earlier and also down from the 930,000 tonnes of petrol exports booked for June, customs data showed.

By Irina Slav for Oilprice.com

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