OIL steadied near a seven-week low, as traders weighed the outlook for demand in top-importer China.
Brent crude held near $80 a barrel after losing more than 3% over the previous two sessions, while West Texas Intermediate was around $76. Prices have shown signs of being technically overstretched in recent sessions.
Banks including Citigroup have downgraded their growth forecasts for Asia’s biggest economy, while export prices of US oil heading to the region are also weakening. China’s second-half imports are also seen as muted.
Oil’s recent slide has also been compounded by trend-following technical traders. Money managers slashed net-bullish wagers last week and have the smallest position in gasoline — a key driver of oil demand growth — in four years.
The rest of this week will see a raft of key data points, from US inventories to an interest rate decision by the Federal Reserve on Wednesday. OPEC+ will hold a monitoring meeting a day later. The market is split on whether the alliance will proceed with a scheduled output increase next quarter.
“The current weakness precipitated by unease about the Chinese economy and recession worries is fundamentally justified,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. “Its longevity, however, is dubious.” – moneyweb.co.za
