Oil prices remained relatively stable, with Brent crude North Sea oil slightly up by USD 0.15 to USD 79.91/bbl, and WTI rising by USD 0.19 to USD 77.17/bbl, after both benchmarks saw over a 1% drop in the previous session.
Reports suggest that Iran might reconsider its threat to retaliate against Israel over the assassination of Hamas and Hezbollah leaders if a peace agreement is reached. However, ongoing concerns about global oil demand growth continue to weigh on the market.
JP Morgan noted in a research report that while geopolitical risks contributed to a rebound in oil prices in August, technical factors suggest that this move might be short-lived, especially as resistance levels are approached.
Bearish China Data
The pressure on oil prices is also fueled by concerns over China’s economic performance, which has cast doubts on its ability to drive global oil demand growth. The National Bureau of Statistics (NBS) of China released data showing that industrial output grew by 5.1% year-on-year in July, a slowdown from June’s 5.3% increase, and that the urban jobless rate rose to 5.2%. Both OPEC and the International Energy Agency have downgraded their global oil demand growth forecasts in light of these developments.
US Inventory Rise
Adding to the bearish sentiment, US crude inventories unexpectedly rose by 1.4 million barrels last week, according to the US Energy Information Administration. This build contrasts with expectations of a 2.2 million barrel drawdown and marks the first increase in inventories since late June.
Despite these challenges, some investors remain hopeful that US demand will remain strong. Carl Larry, vice president of energy futures sales at Marex, suggested that demand might increase towards the end of the year, potentially boosted by a rate cut in September, especially as inflation data appears to be under control.
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