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Business News/ Markets / Commodities/  Oil prices steady as China's faltering economy weighs on tighter market supply; Brent drops to $84/bbl
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Oil prices steady as China's faltering economy weighs on tighter market supply; Brent drops to $84/bbl

Both oil benchmarks - Brent and US WTI, fell more than one per cent in the previous session to their lowest since August 8.

Both oil benchmarks fell more than 1 per cent in the previous session to their lowest since August 8Premium
Both oil benchmarks fell more than 1 per cent in the previous session to their lowest since August 8

Oil prices were little changed on August 16 as concerns over China's economic recovery weighed over expectations of tighter supply in the United States. China's sluggish economy is in focus, after retail sales, industrial output and investment figures failed to match expectations, raising concerns over a longer-lasting slowdown.

Brent crude futures edged up 10 cents to $84.99 a barrel, while US West Texas Intermediate crude (WTI) crept 2 cents higher to $81.01 a barrel. Both benchmarks fell more than one per cent in the previous session to their lowest since August 8. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for an August 21 expiry, were last trading lower by 2.08 per cent at 6,725 per bbl, having swung between 6,696 and 6,772 per bbl during the session so far, against a previous close of 6,868 per barrel.

What's weighing on crude oil prices?

-The Organization of the Petroleum Exporting Countries and allies (OPEC+), and the International Energy Agency (IEA) are banking on China - the world's biggest oil importer - to galvanise the overall crude demand over the rest of 2023. Supply cuts by Saudi Arabia and Russia have pushed up oil prices over the past seven weeks.

-The data from the People's Bank of China showed that the new bank loans tumbled 89 per cent from June to the lowest since late 2009, despite the cut in benchmark interest rates raised concerns over the growth of the worlds second largest economy. Besides, recent economic numbers including fall in import and exports, shrinking factory inflation and deflation in consumer prices had pointed to a demand slowdown in China.

-Also, July activity figures have prompted concerns that China may struggle to meet its growth target of about 5 per cent for the year without more fiscal stimulus, and calls for authorities to take decisive steps.

-American Petroleum Institute figures estimated that US crude stocks dropped by about 6.2 million barrels last week, according to news agency Reuters. Investors will also have eyes on minutes from the Federal Reserve's July policy meeting for further cues on interest rate strategy at the world's biggest oil consumer.

Technical View

Religare Broking has neutral/sideways sentiments on MCX Crude Oil. ‘’MACD bearish crossover suggest possibility of weakness . Dip below 6,650 ranges may extend the fall. Rebound above 6,790 may offer further upside as well,'' said the brokerage firm in its research report. Religare sees technical levels between 6,330 - 7,150. The turnaround is seen at 6,790.

 

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Published: 16 Aug 2023, 09:44 PM IST
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