(Bloomberg) -- Oil fell to the lowest in seven weeks on doubts about the strength of global demand, while investors looked ahead to OPEC+’s meeting for guidance on supplies.
Global benchmark Brent crude settled below $80 for the first time since early June, while West Texas Intermediate slipped below $76 a barrel.
Sentiment in the oil market has been subdued recently after China reported its weakest economic growth in five quarters earlier this month. The nation’s oil import volumes have faltered as refiners’ return from maintenance proceeded at a slow pace. Commodity trading advisers also have been dumping bullish positions after futures dipped below key support levels.
The downbeat sentiment is overwhelming a flareup of geopolitical risks. Israel attacked Hezbollah targets on Sunday and threatened further retaliation for an earlier rocket strike that killed 12 children. Elsewhere, Secretary of State Anthony Blinken said the US has “serious concerns” about the results of the election in Venezuela, after Nicolas Maduro was reelected as the OPEC member’s president for six more years.
Key members of the Organization of the Petroleum Exporting Countries and its allies will hold an online monitoring meeting on Thursday, and delegates have said they’re unlikely to make any recommendations on tentative plans to start restoring output in the fourth quarter. The market is split on whether the cartel will proceed with the scheduled output hike.
Crude prices are modestly higher this year, helped by OPEC+’s supply discipline and expectations that the Federal Reserve is getting closer to lowering borrowing costs. An interest-rate decision from the US central bank is due Wednesday. Yet prices have remained rangebound for several months.
“Oil prices have been trading in a narrowing range, or a triangle pattern, for over a year now,” Bank of America analyst Paul Ciana wrote in a note. “Perhaps some disappearance of macro risk premium, global demand and/or supply cut hope is on the horizon and causes a breakdown in oil to $63.02” by the end of 2024.
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