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Crude Down In August On Demand Worries As Risk Premium Unwinds

OIL

Oil prices fell again on Friday driven by demand concerns and the unwinding of the geopolitical risk premium. The market has been worried about China’s economy for some time, as it is the world’s largest importer of crude, and last week apparent oil demand for July was reported as down 8% y/y. Negotiations for a Gaza ceasefire are yet to produce a deal, while an attack on Israel from Iran or Hezbollah hasn’t materialised.

  • WTI fell 1.9% on Friday to $76.64 to be down 2.1% in August, but off the intraday low of $75.54. It has started the day lower at $76.28/bbl. It remains above support at $74.60 and the bear trigger is at $71.67. Initial resistance is at $80.77.
  • Brent was down 1.7% to $79.65/bbl on Friday and is currently around $79.35. It fell to $78.62 in the European session, just below support at $78.77. The benchmark is now 1.8% lower this month. Initial resistance is at $82.40.
  • Algorithmic trading has caused large swings in oil prices and commodity trading advisers have been large sellers driven by lacklustre economic data in China and the latest EIA data showing a US stock build, according to Bloomberg.
  • US Secretary of State Blinken has arrived in the Middle East for meetings to get agreement on a Gaza ceasefire deal. Israel’s PM Netanyahu said on Sunday that he won’t “give and give” and that Hamas is “completely obstinate”. Others have said that a ceasefire is closer than it has been for months.
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