Oil Price Dip Keeps Brent Below $80 on China Demand Woes

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(Reuters) – Oil prices eased on Monday, with Brent holding below $80 as concern over demand in top oil importer China weighed on market sentiment.

Brent crude futures dropped 63 cents, or 0.8%, to $79.05 a barrel by 0927 GMT. U.S. West Texas Intermediate crude futures slid 73 cents, or 1%, to $75.92.

Both benchmarks fell nearly 2% last Friday as investors tempered their Chinese demand growth expectations but ended the week largely unchanged after U.S. data showed that inflation was moderating despite robust retail spending.

“Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, adding that the approaching end of peak driving season in the United States was another factor weighing on prices.

However, supply risks from tensions in the Middle East and escalation of the Russian-Ukraine war are underpinning the market, he said.

Customs data over the weekend showed that China’s diesel and gasoline exports fell sharply in July, reflecting lower crude processing levels because of weak profit margins.

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On Thursday data also showed China’s economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial output slowing and unemployment rising.

That has stoked worries among traders about a slump in demand from China, where refineries implemented sharp cuts to crude processing rates last month in the face of tepid fuel demand.

Meanwhile, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday on another Middle East tour to push for a ceasefire in Gaza, but Hamas raised doubts about the mission by accusing Israel of undermining his efforts.

The mediating countries – Qatar, the United States and Egypt – have so far failed to narrow enough differences to reach an agreement in months of on-off negotiations.