Image Credits - Financial Tribune
Oil futures have retreated from the gains achieved the previous day, driven by renewed concerns about China’s economic outlook. The initial boost in oil prices, fueled by bullish data on U.S. crude and product drawdowns, has been overshadowed by the latest developments in China. The central bank’s unexpected interest-rate cut, aimed at stimulating the economy, has intensified worries about global economic stability and its potential impact on oil demand.
Phil Flynn of the Price Futures Group commented on the market’s reaction, stating, “Oil trade is having a hard time shaking off economic fears even after some very bullish petroleum data suggests that crude supply is tightening.” This reflects the broader sentiment in the oil market, where despite positive signs regarding supply constraints, economic uncertainties are proving difficult to ignore.
On the other hand, recent economic data from the U.S. presents a more positive picture. The U.S. economy demonstrated notable resilience, with second-quarter GDP expanding by 2.8%, surpassing forecasts and showing a significant improvement from the 1.4% growth recorded in the previous quarter. This strong economic performance underscores the relative strength of the U.S. economy amid global challenges.
However, the impact of China’s economic issues continues to weigh on oil prices. As a result, West Texas Intermediate (WTI) crude has declined by 1.7%, settling at $76.25 per barrel, while Brent crude has decreased by 1.6%, reaching $80.39 per barrel. This decline highlights ongoing concerns about the broader economic environment and its implications for global oil demand.