Oil prices continued to slide and could be heading toward their previous low in June, driven by concerns about demand levels in China, the world’s largest oil importer.
Slower-than-expected economic growth in China as well as declining oil imports have weighed on sentiment. In addition, the planned removal of part of OPEC+’s production cuts could intensify the bearish sentiment.
Traders could brace for a rise in supply, which, coupled with waning demand from China, could further weigh on oil prices and could monitor potential economic policy measures from China’s Politburo.
However, following the Third Plenum in July, which did not yield significant policy changes, expectations for major market-moving decisions remain low. At the same time, geopolitical and political developments could continue to affect the market. Tensions in the Middle East remain a potent force although hopes of a cease-fire could limit upside potential. In Venezuela, disputed election results favouring Nicolas Maduro might lead to tighter US sanctions, potentially reducing oil exports.
