Africa-Press – Kenya. Oil prices retreated slightly on Friday due to market caution in the face of emerging Chinese bearish data, mediocre US inflation rates, and strong weekly US dollar gains, although OPEC’s optimism over a robust Chinese economic resurgence next year capped further price declines.
International benchmark Brent crude traded at $86.09 per barrel at 10.09 a.m. local time (0709 GMT), a 0.36% loss from the closing price on Thursday of $86.40 per barrel.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $82.55 per barrel, down 0.32% from the session close of $82.82 per barrel on Thursday.
Both benchmarks have seen downward price pressures throughout the week as China, the world’s largest oil importer and second-largest oil-consuming country, posted weaker than expected industrial data. As a result, concerns have been raised about the trajectory of oil demand in the country.
China’s recent data, including the Producer Price Index (PPI) and the Consumer Price Index (CPI), as well as its crude import level, intensified deflationary concerns and a slower-than-expected economic recovery. Regardless, a recent report by the OPEC group pointed to “solid global economic growth” in China next year.
In its monthly oil market report, OPEC said continued healthy services sector activity, including leisure, travel and tourism, as well as a recovery of manufacturing activity and petrochemical sector requirements, are expected to support oil demand in 2024.
According to the report, expectations of economic stimulus in China added to the positive sentiment in financial markets, helping the country’s economy achieve this year’s growth target.
Meanwhile, annual consumer inflation in the US came in at 3.2% in July, accelerating from the previous month’s figure of 3%, a sign that inflation has lost at least some of its grip on the US economy.
The value of the US dollar has risen this week, providing a safe haven for investors amid developing fears about global economies, but deterring purchases of dollar-indexed crude oil.
Investors are now awaiting the US Federal Reserve’s (Fed) interest rate decision to seek direction.
After announcing a 25 basis point interest rate hike last month, Fed Chair Jerome Powell stated that inflation has eased slightly since the middle of last year, but added, “nonetheless, the process of getting inflation back down to 2% has a long way to go.”
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