InfoQuest – New York's West Texas Intermediate (WTI) crude futures closed lower on Friday (July 26) and closed in negative territory this week. This was due to a decline in Chinese demand. And on hopes that a ceasefire agreement in Gaza could ease tensions in the Middle East and ease concerns about oil supplies.
The West Texas Intermediate crude contract is due for delivery in September. As for the Brent crude contract for September delivery, it fell $1.12, or 1.4%, to close at $77.16 a barrel. The price of oil fell $1.24, or 1.5%, to close at $81.13 a barrel.
This week, WTI futures fell more than 3%, and Brent futures lost more than 1%.
“Yesterday’s better-than-expected US GDP growth numbers provided initial support to the crude oil market. However, the upside in oil prices remains uncertain,” said George Currie, global head of education and research at CFI. “Regarding the decline in Chinese oil demand.”
Data released last week showed that China's total fuel imports fell by 11% in the first half of 2024, raising concerns about the overall trend of demand in China.
“The demand situation in China is deteriorating,” said Bob Yawger, director of energy futures trading at Mizuho in New York. “The price of crude oil has also fallen.”
Yauker said the Chinese economy is at risk of entering a deflationary cycle. The price will fall because of the decline in demand.
“This is the worst-case scenario for a country that is the world's largest importer of crude oil,” he said.
Meanwhile, demand for oil from the United States, the world’s largest oil consumer, is also expected to decline as American refineries prepare to cut production. The summer driving season, which begins in early September, is coming to an end.
Valero Energy, the second-largest U.S. oil refiner, said Thursday its 14th refinery will run at 92% of its total capacity in the third quarter, after Valero's refinery ran at 94% in the second quarter.
In the Middle East, hopes are growing for a ceasefire in Gaza.
A cease-fire has been the subject of negotiations for months. But U.S. officials believe the two sides are close to agreeing to a six-week cease-fire in exchange for Hamas releasing women, sick, elderly and wounded hostages.
The U.S. oil rig count, a proxy for future production, rose by five to 482 this week and rose by three in July, Baker Hughes Energy said. As a result, the rig count rose for the first month since March.
“Reader. Infuriatingly humble coffee enthusiast. Future teen idol. Tv nerd. Explorer. Organizer. Twitter aficionado. Evil music fanatic.”