Oil holds ground amidst demand concerns
Oil held its ground on Monday as downward pressure from a stronger US dollar and concern about demand in top importer China offset support from political uncertainty in the United States and the Middle East.
The dollar firmed as investors wagered that the attack on US presidential candidate Donald Trump at the weekend has made him more likely to win the election in November.
A stronger US currency tends to weigh on demand for dollar-priced oil.
Brent crude futures was up 1 cent at $85.04 a barrel by 0825 GMT. US West Texas Intermediate crude gained 9 cents, or 0.1 per cent, to $82.30.
“Markets … will probably become a little more defensive” in reaction to the Trump assassination attempt,” said John Evans at oil broker PVM.
“For oil prices, there are no untoward movements,” he said, adding that Monday’s Chinese economic growth data was disappointing.
Crude fell last week after four weeks of gains as hopes of strong US summer demand were countered by concern over demand in China.
Chinese data on Monday added to that concern. The world’s second-largest economy grew by 4.7 per cent in the April to June quarter, official figures showed, the slowest growth since the first quarter of 2023.
On Friday separate figures showed China’s crude oil imports fell 2.3 per cent in the first half of this year.
However, the volatile situation in the Middle East continues to provide a geopolitical premium for oil, though ample spare capacity held by Saudi Arabia and other members of OPEC has limited price support, analysts say.
The oil market is also broadly underpinned by supply cuts from the broader OPEC+ group of producers. Iraq’s oil ministry said at the weekend that it will compensate for overproduction since the beginning of 2024.
“While fundamentals are still supportive, there are growing demand concerns, largely emanating from China,” said ING analysts led by Warren Patterson.