Crude oil prices declined further on Tuesday, with benchmark U.S. crude dropping below the critical $75 per barrel mark, hitting a near two-month low. The decrease is attributed to weak Chinese economic data, which has raised concerns about reduced oil demand from the world’s largest importer.
Fresh jitters shook the crude market after data from China indicated that manufacturing activity in the world’s second-largest economy likely contracted for a third consecutive month in July, according to a Reuters poll. Although China’s government has pledged to bolster the economy, investors remain unimpressed by Beijing’s announcements thus far.
Adding to the downward pressure on crude prices were indications that Israel might be preparing for a ceasefire in the seven-month-long Gaza conflict. Since the outbreak of hostilities between Israeli and Hamas forces in December, the proximity of the Gaza war zone to major oil producers has driven crude prices beyond $85 per barrel in March and June, particularly following disruptions to some crude shipments due to rocket exchanges.
Should an Israel-Hamas ceasefire occur, it could potentially remove $4 to $7 per barrel of risk premium from the crude oil market, according to Bob Yawger, director of energy futures at Mizuho, in a note to the firm’s clients.
On Tuesday, U.S. West Texas Intermediate (WTI) crude settled at $74.73 per barrel, down $1.08, or 1.4%. WTI’s session low was $74.61, a level not seen since its June low of $74.06. July has been a challenging month for oil market bulls, with WTI on track to lose about 10%, its most significant decline since September 2023, when it fell 11%.
UK-origin Brent crude ended Monday’s New York session at $78.63 per barrel, down $1.15, or 1.4%. For July, Brent is on track to fall 9%, marking its most substantial monthly loss since October 2022.
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