Key Points:
Oil prices remained steady reflecting a balance between declining demand growth and tightening supply. Global benchmark Brent crude oil (Symbol: UKOUSD) dropped slightly to $83.62 a barrel. Similarly, US West Texas Intermediate (WTI) crude (Symbol: USOUSD) also fell to $80.65 a barrel.
Picture: Oil prices steady as market faces conflicting influences, as observed on the VT Markets app.
Demand concerns in China
China, the world’s top oil importer, has seen a slowdown in its economic growth, which is weighing on oil demand. Official data showed that the economy of China grew by 4.7% in the second quarter, the slowest pace since the first quarter of 2023. This deceleration in economic activity has led to concerns over weakening demand growth, impacting oil prices.
US supply dynamics
Despite the demand concerns, there are indications of tightening supply in the United States, the world’s largest oil producer and consumer. Market sources, citing data from the American Petroleum Institute, reported that US crude oil inventories fell by 4.4 million barrels in the week ended July 12. The US Energy Information Administration is expected to release its official storage report.
Geopolitical risks in the Red Sea
Adding to the complex market dynamics, rising geopolitical risks are also influencing oil prices. A Liberia-flagged oil tanker was recently attacked by the Yemeni Houthis in the Red Sea, leading to concerns about potential oil spills and disruptions in the supply chain. These geopolitical tensions are helping to limit the decline in oil prices.
What’s in it for day traders
Given the mixed signals in the market, day traders might find opportunities in the volatility. Monitoring US inventory reports and geopolitical developments will be crucial. Traders should maintain risk management due to the high sensitivity of oil prices to geopolitical events and economic data releases.
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