Oil eased on Monday, with global benchmark Brent holding below $80 a barrel, as concern over demand in top oil importer China weighed on market sentiment, offsetting risks to supply in the Middle East.
On Thursday, data from China showed its economy lost momentum in July, with new home prices falling at the fastest pace in nine years. Chinese refineries sharply cut crude processing rates last month on tepid fuel demand.
Brent crude futures dropped 19 cents, or 0.2%, to $79.49 a barrel by 1332 GMT. U.S. West Texas Intermediate crude (WTI) futures was 1 cent lower at $76.64.
“The market is naturally concerned for Chinese oil demand,” SEB analyst Bjarne Schieldrop said. “Net Chinese imports of crude and products have been a big disappointment this year.”
Both benchmarks fell nearly 2% last Friday as investors tempered their Chinese demand growth expectations, but ended the week largely unchanged after U.S. data showed inflation was moderating despite robust retail spending. “Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, adding that the approaching end of peak driving season in the United States was another factor weighing on prices. However, supply risks from tensions in the Middle East and escalation of the Russian-Ukraine war are underpinning the market, he said. U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday on another Middle East tour to push for a ceasefire in Gaza, but Hamas raised doubts about the mission by accusing Israel of undermining his efforts.
The mediating countries – Qatar, the United States and Egypt – have so far failed to narrow enough differences to reach an agreement in months of on-off negotiations.