On Friday, oil prices fell sharply by more than $2, marking a fourth consecutive week of declines. Brent crude futures dropped by $2.61, or 3.28%, to $76.91 per barrel by 11:52 a.m. ET, while US West Texas Intermediate (WTI) crude futures were down $2.82, or 3.7%, at $73.49 per barrel. During the session, US crude futures fell by over $3 per barrel.
Economic Data Impact
The decline in oil prices was primarily driven by disappointing economic data. US job growth for July came in weaker than expected, with the unemployment rate rising to 4.3%. This data raised concerns about potential vulnerabilities in the labor market and increased risks of a recession. “We moved from a demand-driven market to a geopolitical one for maybe two days, then we absolutely nosedived on all this economic data,” said Tim Snyder, chief economist at Matador Economics. He highlighted the bearish impact of Chinese data and the weak US job report on the market.
Chinese Economic Concerns
Economic data from China, the world’s top oil importer, added to the bearish sentiment. Falling manufacturing activity in China and weaker refinery activity in June have raised concerns about slower demand growth. In July, Asia’s crude oil imports fell to their lowest level in two years, driven by weak demand in both China and India, according to data from LSEG Oil Research.
Geopolitical Tensions
Despite the economic data, oil investors are also closely monitoring geopolitical developments. The recent killings of senior leaders from Iran-aligned militant groups Hamas and Hezbollah have heightened fears of potential conflict in the Middle East. Hezbollah has indicated that its conflict with Israel has entered a new phase and has pledged a response following the death of its top military commander in an Israeli strike. These tensions have contributed to market volatility, although they have not been enough to offset the impact of weak economic fundamentals.
Overall, the combination of weak economic indicators and ongoing geopolitical risks continues to influence oil market dynamics, leading to significant price fluctuations.
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