By Erwin Seba
HOUSTON (Reuters) -Oil futures fell about 1.5% on Friday, ending the week lower on weakening Chinese demand and hopes for a ceasefire in Gaza that will ease tensions in the Middle East and related could alleviate supply concerns.
fell $1.24, or 1.5%, to $81.13 a barrel. West Texas Intermediate crude finished $1.12, or 1.4%, lower at $77.16 a barrel.
Brent traded more than 1% lower this week, while WTI fell above 3%.
“Yesterday’s better-than-expected US GDP growth numbers initially supported the crude oil market,” said George Khoury, global head of education and research at CFI. “However, these gains were overshadowed by concerns about declining Chinese oil demand.”
Data released last week showing that China’s total fuel oil imports fell 11% in the first half of 2024 has raised concerns about China’s broader demand outlook.
“The Chinese demand situation here is declining and prices are falling along with it,” said Bob Yawger, director of energy futures at Mizuho in New York.
China’s economy is at risk of entering a deflationary cycle, with prices falling due to declining demand, Yawger said.
“And that’s about the worst possible scenario for a country that is the largest importer of crude oil in the world,” he said.
Meanwhile, demand from the world’s largest oil consumer was also expected to weaken as U.S. refiners prepare to cut production as the summer driving season ends in early September.
The country’s second largest refinery, Valero Energy (NYSE:), said Thursday that its 14 refineries would operate at 92% of combined capacity in the third quarter. Valero’s refineries operated at 94% in the second quarter.
In the Middle East, hopes for a ceasefire in Gaza are gaining momentum.
A ceasefire has been in negotiations for months, but U.S. officials believe the sides are closer than ever to agreeing on a six-week ceasefire in exchange for Hamas’ release of female, sick women , elderly and injured hostages.
Baker Hughes’ U.S. oil rig count, an early indicator of future production, rose by five to 482 this week and three in July, lifting the rig count for the first month since March.
