WTI stays near $68.00 amid renewed demand fears over Chinese macro data
- WTI kicks off the new week on a weaker note in reaction to the dismal Chinese macro data.
- Dovish Fed-inspired USD selling bias lends support and helps limit losses for the commodity.
- The mixed fundamental backdrop warrants some caution before placing fresh directional bets.
During the Asian session on Monday, West Texas Intermediate (WTI) US crude oil prices encountered selling pressure and are currently trading slightly below the $68.00 threshold, reflecting a decline of roughly 0.60% for the day.
Concerns on diminishing gasoline demand in the world’s largest oil importer reemerged following a series of disappointing Chinese statistics over the weekend, which is perceived as a significant factor impacting crude oil prices.
The National Bureau of Statistics stated on Saturday that China’s Retail Sales increased by 2.1% in August compared to the previous year, a decline from the 2.7% rise in the preceding month and below projections. Furthermore, the growth of Industrial Production decreased from 5.1% in July to 4.5% in the reporting month.
Additionally, Fixed Asset Investment increased by 3.4% from January to August, falling short of market expectations, while the unemployment rate unexpectedly surged to a six-month peak.
This follows a negative adjustment of demand growth projections by the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), leading to renewed selling pressure on crude oil prices.
The prevailing selling bias of the US Dollar (USD), driven by anticipations of a substantial interest rate reduction by the Federal Reserve (Fed), bolsters the commodity and mitigates potential declines.
Therefore, it is advisable to await additional selling momentum before affirming that the recent rebound from the lowest point since May 2023 has lost momentum and preparing for the continuation of the preceding slump observed over the past two months.
