Crude Oil Slips on Weak Chinese Demand Outlook

By Adedapo Adesanya

Crude oil went down on Thursday, with Brent down by 91 cents or 1.1 per cent to $80.80 a barrel and the US West Texas Intermediate (WTI) declining by 85 cents or 1.1 per cent to $76.74 per barrel.

The decline was influenced by weaker demand signals from the world’s biggest crude importer, outweighing support from the United States, the world’s largest oil producer.

Oil had risen on Wednesday, snapping consecutive sessions of declines after the Energy Information Administration (EIA) said US crude inventories fell by more than expected to 3.7 million barrels last week.

Despite draws in US crude and gasoline stocks, investors remained wary about weakening demand in China, and expectations of advancing ceasefire talks between Israel and Hamas added to the pressure.

China, the world’s biggest crude importer, surprised markets for a second time this week by conducting an unscheduled lending operation on Thursday at steeply lower rates, suggesting authorities are trying to provide heavier monetary stimulus to prop up the economy.

China’s oil imports and refinery runs this year have trended lower than in 2023 due to weaker fuel demand amid sluggish economic growth, government data shows.

In the Middle East, efforts to reach a ceasefire deal to end the war in Gaza between Israel and the militant group Hamas have gained momentum over the past month. A breakthrough could erode lingering threats to supply and send prices lower.

Meanwhile, Israeli forces advanced deeper into some towns on the eastern side of Khan Younis in southern Gaza on Thursday, hours after Israeli Prime Minister Benjamin Netanyahu told US lawmakers he was actively engaged in bringing hostages home.

Support came as the US economy grew 2.8 per cent in the second quarter, as consumers spent more and businesses increased investments, data showed.

At the same time, inflation pressures eased, which kept intact expectations that the US Federal Reserve would move forward with a September interest rate cut. Lower interest rates tend to boost economic activity, which can spur oil demand.

In Canada, it was reported that hundreds of wildfires are burning in the western provinces of British Columbia and Alberta, including in areas where there is oil.