Crude oil prices were set for yet another loss this week as demand pessimism continue to pressure traders into selling, alleviating supply concerns.
Brent crude and West Texas Intermediate trended higher earlier in the day but were set to end the week lower than they started it, under the weight of economic reports pointing towards lower global demand for oil.
Manufacturing data from key markets in Europe, Asia, and the U.S. showed a slowdown in demand for products, which by extension gets translated into lower demand for energy. In the U.S., the Purchasing Managers’ Index in July fell to the lowest reading in eight months. In the eurozone, the latest PMI reading extended a two-year contraction trend. In China, the PMI reading dropped below 50—the threshold for growth—last month.
On top of this disappointing data, the U.S. labor Department had to make a sharp revision on the number of new jobs added over the 12 months to March, as it turned out the actual new job additions were over 800,000 fewer than previously estimated, fueling concern about demand in the world’s biggest consumer of oil.
“Bullish fundamentals continue to play second fiddle to weakening sentiment, with the oil market unable to shake off its recent bearish tendencies,” energy consultancy FGE said as quoted by Reuters.
“Worries over weaker demand continue to be the main driver for the market at the moment. The downward pressure on prices makes it increasingly likely that OPEC+ will have to scrap their plans for gradually increasing supply from October,” ING analysts said in a note.
The war premium attached to oil prices, however, remains in place as ceasefire talks prove as challenging as one might have reasonably expected them to be. In a recent update, Reuters quoted about a dozen unnamed sources as saying Israel’s demand to keep troops in Gaza after the ceasefire was the latest obstacle to the talks’ successful conclusion.
By Irina Slav for Oilprice.com
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