Crude Oil News Today: Chinese Economic Slowdown Drags Prices Lower

Oil Prices Slide on Chinese Economic Slowdown Concerns

Light crude oil futures tumbled on Tuesday as worries about China’s economic slowdown overshadowed expectations of potential U.S. Federal Reserve rate cuts. The market is poised to test last week’s low, with $80.00 emerging as a key psychological target.

At 10:45 GMT, Light crude oil futures are trading $81.12, down $0.79 or -0.96%.

Chinese Economic Slowdown

China’s GDP growth slowed to 4.7% in Q2 2023, missing the forecast of 5.1% and marking the slowest expansion since Q1 2023. This deceleration, coupled with disappointing retail sales figures, has cast doubt on the optimistic outlook for Chinese oil demand. The protracted property downturn and job insecurity continue to hamper economic recovery.

Federal Reserve Outlook

Fed Chair Jerome Powell’s recent comments suggest growing confidence in inflation returning to the central bank’s target. Market participants interpret this as a sign that interest rate cuts may be on the horizon, potentially as early as September. Lower interest rates could boost economic activity and oil demand by decreasing borrowing costs.

OPEC+ and Geopolitical Factors

Despite OPEC+ supply restraint and ongoing Middle East tensions, oil prices remain under pressure. Brent futures settled at $84.85 a barrel on Monday, while U.S. West Texas Intermediate (WTI) crude closed at $81.91.

Refinery Activity and Imports

China’s refinery output fell 3.7% in June year-over-year, marking the third consecutive month of decline. Planned maintenance, lower processing margins, and weak fuel demand have led independent plants to reduce output. This trend, along with subdued crude imports, adds to the bearish sentiment.

U.S. Political Landscape

The market is also factoring in recent political developments in the United States. The assassination attempt on former President Donald Trump has garnered attention, with some analysts suggesting it could potentially boost his re-election chances. This adds another layer of uncertainty to the market outlook.

Market Forecast

The short-term outlook for oil prices appears bearish, with WTI crude likely capped below $85 per barrel. Weak macroeconomic data from the U.S., particularly the upcoming June retail sales figures, could further dampen oil demand.

Traders should closely monitor Chinese economic indicators, U.S. data releases, and political developments for potential price catalysts in the coming weeks. The interplay between global economic concerns and geopolitical factors will likely drive market volatility in the near term.

Technical Analysis

Light crude oil futures are under pressure Tuesday, falling within striking distance of last week’s low at $80.81. The downside momentum suggests this could lead to a further decline into $80.18, which is just above psychological support at $80.00.

A failure at $80.00 could trigger an acceleration into the support cluster formed by a short-term 50% level at $72.16 and the 50-day moving average at $79.06. Look for buyers to re-emerge following a test of this value area.