Oil falls on weak China demand concerns, Mideast ceasefire talks
Shafaq News/ Oil prices eased on Thursday as concerns over weak demandin China, the world's largest crude importer, and expectations of a nearingceasefire deal in the Middle East overcame gains in the previous session afterdraws in U.S. inventories.
Brent crude futures for September fell 63 cents, or 0.8%, to $81.08 abarrel by 0355 GMT. U.S. West Texas Intermediate crude for September slid 63cents, or 0.8%, to $76.96 per barrel.
Both benchmarks settled higher on Wednesday, snappingconsecutive sessions of declines after the Energy Information Administrationsaid U.S. crude inventories fell by 3.7 million barrels last week. Thatcompared with analysts' expectations in a Reuters poll for a 1.6-million-barreldraw.
U.S. gasoline stocks dropped by 5.6 million barrels,compared with analysts' expectations for a 400,000 draw. Distillate stockpilesfell by 2.8 million barrels versus expectations for a 250,000-barrel increase,the EIA data showed.
"Despite draws in U.S. crude and gasoline stocks,investors remained wary about weakening demand in China and expectations ofadvancing ceasefire talks between Israel and Hamas added to pressure,"said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
This year, China's oil imports and refinery runs havetrended lower than in 2023 on weaker fuel demand amid sluggish economic growth,according to government data.
Slumping U.S. stock markets also reduced traders' riskappetite, Kikukawa added. All three main indexes on Wall Street ended lower onWednesday.
In the Middle East, efforts to reach a ceasefire deal to endthe war in the Gaza Strip between Israel and militant group Hamas under a planoutlined by U.S. President Joe Biden in May and mediated by Egypt and Qatarhave gained momentum over the past month.
On Wednesday, Israeli Prime Minister Benjamin Netanyahusketched a vague outline of a plan for a "deradicalized" post-warGaza in a speech to U.S. Congress and touted a potential future alliancebetween Israel and America's Arab allies.
"If Middle East ceasefire talks progress, U.S. equitiescontinue to slide, and China's economy remains sluggish, oil prices could fallto early June levels," said Satoru Yoshida, a commodity analyst withRakuten Securities.
Additionally, clarity on U.S. interest rate cuts is missing,said Phillip Nova analyst Priyanka Sachdeva, who does not expect robust demandgiven China's economic recovery has been poor.
The U.S. Federal Reserve is expected to cut rates just twicethis year, in September and December, according to a Reuters poll ofeconomists, as resilient U.S. consumer demand warrants a cautious approachdespite easing inflation.
Lower interest rates should spur economic growth, leading tomore oil consumption.
(Reuters)
