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Oil prices in third weekly plunge as demand concerns bite

Published 2024-07-25, 09:42 p/m
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Investing.com-- Oil prices settled lower Friday, suffering a third consecutive losing week as concerns over sluggish demand conditions in China dented sentiment.

At 14:30 ET (18:30 GMT), Brent oil futures fell 2% to $80.70 barrel, and West Texas Intermediate crude futures dropped 1.4% to $77.16 a barrel.

Crude in third straight week of losses

The third losing week for oil prices was driven by ongoing concerns over slowing growth and weaker demand from top importer China as data showed the country's apparent oil demand fell 8.1% to 13.66 million barrels per day in June.

The persist growth concerns in China follow a weaker GDP print last week showing its economy grew less than expected in the second quarter.

Beijing attempted to arrest worries about stumbling growth by unexpectedly cutting a swathe of lending rates this week, but that has done little to lift sentiment.

Apart from China, uncertainty over Japan also grew following middling inflation data from Tokyo, while weak activity data in Europe also pointed to economic woes.  

Gaza ceasefire in focus

Also weighing on the crude market have been increasing hopes of a ceasefire in Gaza.

The leaders of Australia, New Zealand and Canada called for an immediate ceasefire in a joint statement on Friday, while U.S. Vice President Kamala Harris has pressed Israeli Prime Minister Benjamin Netanyahu to help efforts at reaching a deal, striking a tougher tone than President Joe Biden.

A ceasefire has been talked about for months, but if it was to occur then some of the risk premium could be removed from the market.

Strong US growth, cooling inflation data boost rate cut hopes; Rig counts jump

The downside in oil prices was limited somewhat by stronger data out of the U.S. showing better-than-expected Q2 growth and cooler inflation, stoking investor optimism on a soft landing and sooner rate cuts.  

According to data from the Bureau of Economic Analysis, the personal consumption expenditures (PCE) price index slipped to 2.5% in June, from 2.6% the prior month. .

On the domestic demand front, meanwhile, data showing steady drawdowns in U.S. oil inventories also offered some positive cues to oil markets, as fuel demand in the country remained robust amid the travel-heavy summer season. 

In sign of pick in drilling activity, oilfield services firm Baker Hughes on Friday reported its weekly U.S. rig count climbed to 482 from 477.

(Ambar Warrick contributed to this article.)

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