Oil Prices Settle Lower Amid Economic Concerns

Oil prices settled lower on Thursday, giving up gains from geopolitical tensions over fears of slowing U.S. economic growth affecting crude demand.

Brent oil futures fell 1.7% to $79.82 a barrel, while West Texas Intermediate crude rose 1.7% to $76.62 a barrel.

Weaker U.S. Economic Data Take Center Stage

A couple of economic reports showed a larger-than-expected rise in initial jobless claims and further deterioration in U.S. manufacturing.

• Initial jobless claims increased to 249,000 for the week ending July 27, exceeding expectations.
• The ISM manufacturing index for July was 46.8, below the 48.2 forecast.

Jefferies noted that the 16-month streak of sub-50 readings in manufacturing was the longest since the early 2000s, highlighting fears of a downturn in the U.S. economy, overshadowing recent geopolitical premiums in oil prices.

Israel-Hamas Fears in Focus After Haniyeh Killing

The crude oil risk premium increased due to concerns over retaliation by Hamas against Israel following the killing of its leader, Ismail Haniyeh, in Tehran. Though Israel did not claim responsibility, it was widely believed they conducted the attack, escalating fears of broader conflict in the region and potential disruptions to oil supplies.

OPEC+ Committee Set to Meet, Few Changes Expected

The Joint Ministerial Monitoring Committee of OPEC+ was scheduled for an online meeting in which few changes to production levels were anticipated despite recent declines in oil prices. Discussions among top producers like Saudi Arabia and Russia indicated a reluctance to scale back production cuts.

China Concerns Linger

Sentiment around oil prices was further impacted by ongoing worries regarding economic recovery in China, the world’s top oil importer. Recent PMI data showed an unexpected contraction in China’s manufacturing sector, aligning with government reports, and intensified calls for more stimulus measures from Beijing.

(Contributors: Peter Nurse, Ambar Warrick)