Oil Prices Decline for Third Consecutive Week

Oil prices settled lower on Friday, marking a third consecutive week of losses amid concerns over sluggish demand in China.

At 14:30 ET (18:30 GMT), Brent oil futures decreased by 2% to $80.70 per barrel, while West Texas Intermediate crude futures fell 1.4% to $77.16 per barrel.

Crude in Third Straight Week of Losses

The continued decline in oil prices is attributed to worries regarding slowing growth and diminished demand from China, the world’s top oil importer. Recent data revealed that China’s apparent oil demand dropped by 8.1%, reaching 13.66 million barrels per day in June.

Concerns persist following a lower-than-expected GDP growth rate for the second quarter in China. Although Beijing announced an unexpected reduction in lending rates this week to address these worries, market sentiment remains subdued.

Moreover, uncertainty increased in Japan following weak inflation data, and lackluster activity in Europe raised further economic concerns.

Gaza Ceasefire in Focus

An additional factor affecting the crude market is the hope for a ceasefire in Gaza. Leaders from Australia, New Zealand, and Canada urged for an immediate ceasefire in a joint statement. U.S. Vice President Kamala Harris has also advocated for peace negotiations with a firmer approach than President Joe Biden.

Discussions about a ceasefire have been ongoing for months, and its potential implementation could ease some of the risk premium currently in the market.

Strong U.S. Growth and Cooling Inflation Data Boost Rate Cut Hopes; Rig Counts Jump

Despite the declines, strong economic data from the U.S. has somewhat limited the fall in oil prices. Better-than-expected Q2 growth and easing inflation have increased optimism regarding a soft economic landing and potential rate cuts.

Data from the Bureau of Economic Analysis indicated that the personal consumption expenditures (PCE) price index decreased to 2.5% in June from 2.6% the previous month.

On the domestic side, consistent declines in U.S. oil inventories have provided some positive indications for oil markets, as fuel demand remains robust during the busy summer travel season.

In a sign of increased drilling activity, oilfield services firm Baker Hughes reported a rise in U.S. rig counts, with the number climbing from 477 to 482 this week.