Oil prices drop amid mixed economic signals
PUBLISHED
2024-07-22
Content
Another losing week for oil, despite growing optimism about a possible rate cut or cuts in the US.
With Chinese demand weaker than expected and the US rate cut story about to undergo another test this week with the Fed’s preferred inflation measures to be released, the oil market was left betwixt and between on Friday, with the CrowdStrike/Microsoft outage adding to the confusion.
China released mixed economic data last week. GDP grew by 4.7% in the second quarter, while economists were expecting growth of 5.1%. Oil imports fell, but gas imports rose, as did oil and iron ore; steel production fell, and copper metal imports eased off.
China’s property data for June and the first half was abysmal, and the great talkathon (AKA The Plenium) produced nothing on Thursday and Friday to lift confidence in future help for the economy’s sinkhole.
In the US, Donald Trump bombasted himself into an election-winning lead in the polls and started tossing off economic policy non-sequiturs left, right, and center (such as tariffs don’t boost inflation), supported by his Vice Presidential running mate.
In other news, US crude inventories continue to fall, which is normally a bullish point in favor of rising oil demand and prices. The Houthis remain active in disrupting shipping traffic in the Red Sea, and forest fires threaten production sites in Canada.
But prices saw a losing outcome for the week. West Texas Intermediate (WTI) ended the week at $80.14, down 3.2% for the day and 2.5% for the week, while Brent ended at $82.63, down 3% for the week.
The week saw another dip in oil rig numbers in the US, according to oil services group Baker Hughes and its weekly survey. The count for oil fell to 477 from 478 a week earlier. The tally for gas rose by three to 103, while miscellaneous rigs were flat at six. A year earlier, the US had 530 oil, 131 gas, and eight miscellaneous rigs in operation.
Overall, 586 rigs were operating in the US this week, down from 669 a year earlier.
"To the upside, growing Chinese demand concerns are capping the market, following a raft of data earlier this week suggesting a softer demand picture," ING Bank’s Head of Commodities Strategy, Warren Patterson, wrote. "To the downside, expectations of a tight market through the third quarter continue to provide a floor to prices."
Author
Name | Glenn Dyer | Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey. |