Oil prices declined marginally in early Asian trading on Monday as concerns over weaker demand from China, the world’s largest oil importer, persist.
Brent crude oil, against which Nigerian oil is priced, fell by 13 cents, or 0.2% to close at $79.55 per barrel.
Similarly, U.S. West Texas Intermediate (WTI) crude oil dropped by 13 cents, or 0.2% to $76.52 per barrel.
The dip in oil prices follows a nearly 2% decline last Friday as investors tempered their expectations of demand growth from China.
Despite the recent pullback, both benchmarks remained relatively stable for the week, largely due to positive economic data from the United States.
Inflation was shown to be moderating, and retail spending demonstrated resilience, helping to offset some of the bearish sentiment.
Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities, attributed the sell-off to “persistent concerns about slow demand in China” and noted that the approaching end of the peak driving season in the United States also weighed on prices.
However, Kikukawa emphasized that geopolitical tensions in the Middle East and the ongoing conflict between Russia and Ukraine continue to support the market, as these factors pose significant supply risks.
Recent data from China have fueled concerns about the country’s economic health. In July, China’s economy lost momentum, with new home prices falling at the fastest pace in nine years, industrial output slowing, and unemployment rising.
These developments have stoked worries among traders about a potential slump in demand from China, where refineries significantly reduced crude processing rates last month due to tepid fuel demand.
Adding to the uncertainty, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday for another round of Middle East diplomacy aimed at securing a ceasefire in Gaza.
However, efforts to broker peace faced setbacks as Hamas accused Israel of undermining the negotiations.
Despite the involvement of mediating countries such as Qatar, the United States, and Egypt, months of on-and-off talks have failed to produce a lasting agreement, with violence in Gaza continuing unabated.