Oil down on demand fears after data signals China's weakening economy

Oil down on demand fears after data signals China's weakening economy

Prices fall after both benchmarks record their highest level since January 2022

By Sibel Morrow

Oil prices dipped on Monday as market risk appetite was impacted by worse-than-expected Chinese industrial data, but losses were capped by intervention to support the world's largest oil importer's weakening economy.

International benchmark Brent crude traded at $84.25 per barrel at 9.57 a.m. local time (0657 GMT), a 0.19% loss from the closing price on Friday of $84.41 per barrel.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $80.44 per barrel, down 0.17% from the session close of $80.58 per barrel on Friday.

Oil prices rose to their highest level since January 2022, with Brent briefly topping $85.09 during Friday's trading session as investors digested the US Federal Reserve's latest decision to raise interest rates by 25 basis points, as expected.

However, the rising oil price trend was halted by the National Bureau of Statistics (NBS) report on Monday of restricted growth of 49.3 in July from 49 in June.

Nonetheless, further price declines were halted on hopes that China would issue a stimulus plan to boost its economy in response to emerging bearish data.

Price increases were aided by growing concerns about a tighter market ahead of OPEC+'s latest production cuts, led by Russia and Saudi Arabia, which take effect on Aug. 1.

Russia, Saudi Arabia and Algeria agreed on new cuts in July, in addition to the OPEC+ group's already planned output caps of about 2 million barrels per day (bpd) in October 2022 and 1.6 million bpd in May.

Russia said it would reduce oil exports by 500,000 barrels per day (bpd) in August to ensure market stability.

Its decision came on the same day that Saudi Arabia and Algeria said they would cut output by 1 million bpd and 20,000 bpd, respectively.

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