Oil steadied on Tuesday near its lowest levels since early June as worries about demand in China were balanced by a government pledge of policy measures for the economy and the prospect of lower U.S. crude and product inventories, reports Reuters.
A raft of disappointing economic news from China, the world’s largest crude importer, has been weighing on commodity prices.
China’s manufacturing activity likely shrank for a third month in July, a Reuters poll showed on Monday.
Brent crude slipped by 16 cents, or 0.2%, to $79.62 a barrel by 1042 GMT. It fell intraday to $79.34, the lowest since June 10. U.S. crude was down 11 cents, or 0.2%, at $75.70.
“Macroeconomic considerations keep shaping investors’ sentiment,” said Tamas Varga from oil broker PVM. “Chinese economic turmoil, including sluggish growth and falling crude oil imports, is still a major driving force for our market.”
Even as Chinese leaders vowed to step up support for the economy, expectations on the extent of such measures have been limited since the Third Plenum, a policy meeting in mid-July, largely reiterated existing economic policy goals.
Coming up on Thursday, top ministers from OPEC+, the Organization of the Petroleum Exporting Countries along with allies led by Russia, will meet to review the market, including a plan to start unwinding some output cuts from October. No changes are currently expected.
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Oil fell 2% in the previous session after Israel signalled that its response to a rocket strike in Israeli-occupied Golan Heights on Saturday would be calculated to avoid dragging the Middle East into an all-out war.
In OPEC-member Venezuela, the opposition said it had won 73% of the vote in Sunday’s presidential election, despite the national electoral authority having declared incumbent Nicolas Maduro the winner.
“Nicolas Maduro’s victory in the latest Venezuelan election is a headwind for global supply, as this could result in tighter U.S. sanctions,” ANZ analysts said in a note, estimating that such a scenario could cut Venezuela’s exports by 100,000-120,000 barrels per day.
Some support could come from the latest U.S. inventory reports due this week, which are expected to show lower crude and fuel stocks.