Oil prices set for 4th weekly decline amid demand concerns

By Duygu Alhan

Oil prices see fourth consecutive weekly decline during the week ending August 2 due to demand concerns in China, while ongoing conflicts in the Middle East and decision by some central banks of major economies to reduce interest rates limited further price declines.

The International benchmark Brent crude traded at $79.41 per barrel at 2.30 p.m. local time (1130 GMT) on Friday, down by around 1.1% relative to the closing price of $80.28 a barrel on Friday last week.

West Texas Intermediate (WTI), the American benchmark, traded at $76.25 a barrel at the same time on Friday, a decline of about 1.2% from last Friday's session, which closed at $77.16 per barrel.

Prices declined over the week due to data indicating a slowdown in economic recovery in China, the world's biggest oil importer.

China's gross domestic product (GDP) increased by 4.7% in the second quarter of 2024, less than the market's projections, following a decline in oil imports, according to official data.

Uncertainty over oil demand in the country fueled market players' fears that imports and refining activity could also remain low which put downward pressure on prices.

Mid-week developments related to the assassination of the head of the Palestinian Hamas group's political bureau and rate cuts by some central banks offset the fall in oil prices.

Ismail Haniyeh, the head of the Palestinian Hamas group's political bureau was assassinated by an Israeli airstrike in Tehran early Wednesday.

Despite cease-fire talks, rising geopolitical tensions in the oil-rich region supported price increases by fueling supply risk in the markets.

Meanwhile, some major Central Banks' decision to reduce interest rates lent upward support to oil prices during the week by supporting strong economic activity expectations and higher oil demand.

US Federal Reserve Chair Jerome Powell hinted on Wednesday at the possibility of an interest rate cut in September that investors had much hoped for.

The Bank of England on Thursday cut the bank rate by 25 basis point from 16-year high to 5%, as widely expected.

Moreover, the European Central Bank is expected to cut interest rates again in September with a 95% probability despite mixed inflation data.