Crude oil prices continued to decline early on Tuesday, driven by new economic data from China indicating weaker-than-expected growth.
Brent crude fell below $80 a barrel, while West Texas Intermediate hovered just above $75 per barrel. The drop in prices followed a Reuters report on a poll of economists who expect China’s manufacturing activity to shrink for the third consecutive month.
Citi also revised its economic outlook for China on Monday, now predicting GDP growth at 4.8%, down from the previous forecast of 5%. This adjustment came after China’s second-quarter growth figures fell short of expectations.
In more positive news, analysts from ANZ suggested that the outcome of the Venezuelan elections could lead to a decrease in global oil supply if the United States tightens sanctions on Caracas. Venezuela’s electoral authority declared Nicolas Maduro the winner of the presidential election, but the opposition claims it won 73% of the votes.
“Nicolas Maduro’s victory in the latest Venezuelan election poses a challenge for global supply, as it could result in tighter US sanctions,” ANZ stated in a note, quoted by Reuters. The potential impact of stricter sanctions could reduce Venezuelan output by 100,000 to 120,000 barrels per day.
Later this week, oil prices might fluctuate with a Federal Reserve meeting scheduled for Wednesday, which could revive hopes for an interest rate cut before the end of the year. Additionally, OPEC is holding a monitoring meeting on Thursday. According to Bloomberg, some market participants expect OPEC might consider rolling back some production cuts. However, this is highly unlikely in the current price environment, as the cartel has indicated that rollbacks will only occur if market conditions, specifically higher prices, are favorable.