Oil hesitates, Chinese economy sows doubt

(London) Oil prices were moving without a clear direction on Monday, caught between the health of the Chinese economy, which raises fears of weak demand, and attempts to trigger a recovery such as the rate cut by the Chinese central bank.


At around 5:30 a.m. ET, the price of a barrel of North Sea Brent crude for September delivery was down 0.15% to $82.50.

Its American equivalent, the barrel of West Texas Intermediate (WTI) for delivery in August, which is the last day of trading, fell 0.15% to 80.01 dollars after briefly slipping below the 80 dollar mark for the first time since mid-June.

Prices had started the European session slightly higher “after the unexpected interest rate cut in China, a move by the People’s Bank of China aimed at supporting the economy” which could “slightly reduce concerns about demand for crude oil” in the country, commented Samer Hasn, analyst at XS.com.

China’s central bank cut two benchmark interest rates on Monday, hoping to boost faltering growth in the world’s second-largest economy after a string of disappointing economic indicators.

The Asian giant is in the grip of an unprecedented crisis in its vast real estate sector, persistently weak consumption and high youth unemployment. And a year and a half after the lifting of health restrictions that penalized activity, the much-hoped-for post-COVID-19 recovery has been brief and less robust than expected.

“The stagnation of the economy [chinoise] “This is inevitably reflected in the various oil data,” says Tamas Varga of PVM Energy.

“The country, which is supposed to be the beating heart of oil demand growth, demanded, on average, “2.3%” of foreign crude oil in the first half of the year” compared to the same period in 2023, he added.

Elsewhere, the week will be “marked by a series of key data for energy markets, which will help determine the state of economic activity, whether in the United States or in the eurozone,” says Samer Hasn.

On Wednesday, markets will await the publication of the July flash composite PMI index by S&P Global for the eurozone.

Investors’ attention is then expected to be absorbed on Friday by the publication of the June PCE inflation index in the United States, the Federal Reserve’s (Fed) preferred measure for tracking inflation.

Markets are also awaiting the publication of US GDP for the second quarter on Thursday.


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