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Headlines
- Oil prices rose on Friday but are on track for a fourth consecutive weekly decline.
- Disappointing global fuel demand growth and weaker economic data from key regions are influencing prices.
- Geopolitical tensions in the Middle East are contributing to market uncertainty.
Oil prices experienced a rise on Friday but are poised for a fourth successive weekly decline due to concerns over global fuel demand growth overshadowing fears of supply disruptions. Brent crude futures increased by 62 cents, or 0.8%, reaching $80.13 per barrel by 0345 GMT, while U.S. West Texas Intermediate crude futures also rose by 62 cents to $76.93. Despite this, both benchmarks have decreased by approximately 7.3% over the past four weeks, marking the longest streak of consecutive weekly losses this year in oil and gas stocks.
Economic data from China, the leading oil importer, has been disappointing, with a survey indicating weaker manufacturing activity across Asia, Europe, and the United States. This trend suggests a slower global economic recovery, which could negatively impact oil consumption. Analysts at ANZ noted, "China's road traffic saw a seasonal decline for the third consecutive year," while "weaker U.S. economic data suggested weakening oil demand prospects."
Additionally, falling manufacturing activity in China has further dampened prices, compounding concerns about demand growth after June data revealed lower imports and refinery activity compared to the previous year. According to LSEG Oil Research, Asia's crude oil imports in July dropped to their lowest level in two years, driven by weak demand in China and India.
Market participants are also closely monitoring developments in the Middle East. The recent killings of senior leaders of Iran-aligned militant groups Hamas and Hezbollah have raised fears of potential conflict in the region, which could disrupt oil supplies. ANZ analysts pointed out, "Heightened geopolitical tensions were reflected in a rising premium for call options as traders are taking a view that prices will rise," noting that Brent call option contract purchases have reached their highest volume since April.
Oil three-month implied volatility has increased to 26.6% from a low of 22.6% in mid-July, indicating growing uncertainty in the market.
