By Adedapo Adesanya
Oil fell by $1 on Friday, finishing the week lower on declining Chinese demand and hopes of a Gaza ceasefire agreement that could ease Middle East tensions and accompanying supply concerns.
Brent crude lost $1.24 or 1.5 per cent to settle at $81.13 a barrel and the US West Texas Intermediate (WTI) crude shed $1.12 or 1.4 per cent to finish at $77.16 a barrel.
For the week, Brent depreciated by more than 1 per cent, while WTI fell beyond 3 per cent.
The market has been occupied this week with China as data showed that the total fuel oil imports, in the world’s top oil importer dropped 11 per cent in the first half of 2024 have raised concern about the wider demand outlook in China.
China’s economy threatens to enter a deflationary cycle, where prices will fall due to falling demand.
The development in the world’s second-largest economy outweighed the better-than-expected gross domestic product (GDP) growth figures in the US which initially supported the crude market.
Meanwhile, demand from the US, the world’s top oil consumer was also expected to ease as refiners are preparing to cut back production as the end of the summer driving season in early September nears.
In the Middle East, hopes of a ceasefire in Gaza have been gaining momentum, affecting crude prices.
A ceasefire has been the subject of negotiations for months but now, US government officials believe the parties are closer than ever to an agreement to halt the current war in exchange for the release by Hamas of female, sick, elderly and wounded hostages.
“We are closer now than we’ve been before,” said White House national security spokesperson Mr John Kirby, adding that gaps remained.
US President, Mr Joe Biden had pressed for a ceasefire in talks in Washington on Thursday with the Prime Minister of Israel, Mr Benjamin Netanyahu on reaching a final deal.
In a speech to the US Congress on Wednesday, Mr Netanyahu said that Israel was engaged “in intense efforts” to secure the release of hostages held in Gaza.
Baker Hughes’ count of U.S. oil drilling rigs, an early indicator of future output, increased by five to 482 this week and by three in July, raising the number of rigs for the first month since March.
