Crude oil prices are on track for another decline this week as ongoing concerns about demand push traders to sell off their positions, easing supply worries.
Both Brent crude and West Texas Intermediate (WTI) oil prices had risen earlier in the week but are now expected to finish lower than they began. This shift is driven by economic reports indicating reduced global oil demand. Recent manufacturing data from major markets in Europe, Asia, and the U.S. point to a slowdown in product demand, which in turn affects energy needs. In the U.S., the Purchasing Managers’ Index (PMI) for July dropped to its lowest level in eight months. In the eurozone, the latest PMI reading continued a two-year contraction trend. Meanwhile, in China, the PMI fell below the 50 mark—the threshold for growth—last month.
Additionally, the U.S. Labor Department revised its job growth figures for the past year, revealing that actual new job additions were over 800,000 fewer than initially estimated. This has raised concerns about demand in the world’s largest oil consumer.
“Despite some positive fundamentals, the oil market remains under bearish pressure due to weak sentiment,” said energy consultancy FGE, as reported by Reuters.
“Fears of declining demand are currently driving the market. The downward pressure on prices makes it increasingly likely that OPEC+ may need to reconsider its plans to gradually increase supply from October,” ING analysts noted.
Despite these challenges, the “war premium” on oil prices remains. Efforts to resolve the conflict, including recent ceasefire talks, face difficulties. Reuters reported that Israel’s insistence on maintaining troops in Gaza after the ceasefire has been a major stumbling block to a successful resolution.