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Crude oil continues its significant decline for the fourth day in a row, by 1% for both major benchmarks, Brent and West Texas Intermediate (WTI).
Today’s price declines come with more negative economic data, this time from China, with inflation slowing at an unexpected pace in a sign of market concerns about oil demand.
These inflation figures follow the manufacturing PMI report for last June, which reported a decline in confidence to the lowest levels since 2019, despite the continued expansion of activities.
Annual inflation growth slowed to 0.2% in June from 0.3% in May, while expectations indicated an acceleration to 0.4%. While prices contracted by 0.2% on a monthly basis, in light of seasonal factors, according to the National Bureau of Statistics in China.
The continued sharp decline in crude prices also coincides with the return of many oil and gas shipment facilities to work on the Gulf Coast in the US after Tropical Storm Beryl, which led to the precautionary closure of those facilities, which were not damaged in their turn, thus dispelling concerns about the safety of supplies.
While higher-than-expected withdrawals from crude inventories in the US yesterday were unable to stop the downward trend in prices. The American Petroleum Institute (API) reported a decline in inventories by 1.923 million barrels in the week ending July 5, which was more than expected.
In the Middle East, there is nothing new in the process of negotiating a possible ceasefire in Gaza that would defuse a wide-ranging regional war that might threaten the safety of energy supplies in the region. However, the markets either appear to be optimistic about resolving the conflict or believe that the conflict’s borders do not threaten global supplies.
At the same time, the Israelis continue to fight in Gaza in areas from which they had previously withdrawn, but this time using ground attacks of a smaller scale than those previously along with airstrikes. More evacuation orders were also issued for tens of thousands of residents of the Gaza Strip, which Hamas said brought the negotiations back to “point zero.” This comes after a previous statement by Benjamin Netanyahu that he is still adhering to his military goal in Gaza.
While the repositioning and reinforcement of forces near the southern Lebanon front comes as a signal of a broader potential escalation as hostilities continue there, according to the Wall Street Journal. While the South Lebanon front is preparing to ignite at any time unless the conflict in Gaza is settled in the first place.
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