Crude Oil News Today: Chinese Slowdown Weighs While OPEC+ Cuts Support

Oil Prices Hold Steady Amid Dollar Strength and Chinese Demand Concerns

Oil prices maintained their ground on Monday as conflicting market forces came into play. The strengthening U.S. dollar and concerns about Chinese demand exerted downward pressure, while robust demand elsewhere and OPEC+ supply constraints provided support.

At 10:43 GMT, Light Crude Oil futures are trading $82.06, down $0.05 or 0.06%.

Dollar Strength Impacts Oil Prices

The U.S. dollar firmed following an attempted assassination of former President Donald Trump, affecting oil prices. A stronger dollar typically makes oil more expensive for buyers using other currencies, potentially dampening demand.

Chinese Economic Slowdown

China’s economic data revealed a slowdown, with GDP growth of 4.7% in Q2 2024 – the slowest since Q1 2023. This deceleration, coupled with a 2.3% drop in crude oil imports during H1 2024, raised concerns about demand from the world’s second-largest economy.

UBS analyst Giovanni Staunovo noted that Chinese data, including refinery runs and crude imports, were not supportive of oil prices. However, he added that “demand growth elsewhere is still healthy.”

OPEC+ Supply Cuts Support Market

Despite bearish factors, OPEC+ supply cuts continue to underpin the oil market. Iraq’s recent commitment to compensate for overproduction since early 2024 further reinforces this support.

Geopolitical Tensions

The volatile situation in the Middle East provides a geopolitical premium for oil prices. However, ample spare capacity held by Saudi Arabia and other OPEC members has limited this upward pressure.

Recent Price Movements

Crude oil prices fell last week after four consecutive weeks of gains. The initial optimism about strong U.S. summer demand was countered by growing concerns over Chinese consumption.

Market Forecast

The short-term outlook for oil prices remains cautiously bearish. The strengthening dollar and Chinese demand concerns are likely to outweigh OPEC+ supply cuts and geopolitical tensions in the near term. Traders should closely monitor U.S. economic data, Chinese demand indicators, and dollar movements for potential market shifts.

As ING analysts noted, “While fundamentals are still supportive, there are growing demand concerns, largely emanating from China.” This statement encapsulates the current market sentiment, balancing positive and negative factors influencing oil prices.

Technical Analysis

Light crude oil futures are nearly flat but the formation of a seconary lower top at $83.74, suggests the selling may be greater than the buying at current price levels. New selling pressure later in the session could drive prices into the nearest support at $80.83, but a failure here could lead to a quick test of $79.16.

Additionally, the market could become rangebound quickly if a new catalyst doesn’t emerge.