Oil Prices Drop to Lowest Levels Since January

by Georgina McCartney

Houston, Aug. 2 (Reuters) – Oil prices fell on Friday, with Brent settling at its lowest since January after disappointing U.S. job data and weak economic indicators from China.

Brent crude futures decreased by $2.71, or 3.41%, closing at $76.81 a barrel, while U.S. West Texas Intermediate crude futures fell by $2.79, or 3.66%, to $73.52.

Both benchmarks experienced a session low drop of over $3 per barrel.

U.S. job growth in July slowed more than anticipated, with unemployment rising to 4.3%, raising concerns about a possible recession.

Tim Snyder, chief economist at Matador Economics, commented, “We moved from a demand-driven market to a geopolitical one for maybe two days then we absolutely nosedived on all this economic data.”

Data from China, the world’s largest oil importer, showed declining manufacturing activity, which further dampened oil prices amid fears of a slow global economic recovery impacting oil consumption.

China’s crude imports in July hit a two-year low due to weak demand in both China and India, according to LSEG Oil Research.

Additionally, OPEC’s oil production rose in July, with output increasing by 100,000 bpd to 26.70 million bpd as Saudi Arabia’s supply rebound offset ongoing voluntary cuts from other members.

An OPEC+ meeting on Thursday maintained the current oil output policy, which includes plans to begin unwinding production cuts in October.

Amid these factors, oil investors are also focused on the Middle East. Though tensions escalated with Hezbollah’s conflict with Israel, analysts observed no significant disruption to oil supplies, and prices slumped to multi-week lows soon after recent geopolitical events.

John Kilduff, a partner at Again Capital in New York, noted, “Oil has been pumped up on just extraordinary jitters over the Middle East situation but here we are several days after a significant event.”