28 Aug 2024
WTI drops below $75.50 amid economic worries in the US and China
- WTI price trades in negative territory in Wednesday’s early European session, down 0.35% on the day.
- Slower economic growth in the US and China could diminish demand for WTI.
- The potential shutdown of Libya's oil production and Middle East geopolitical tensions might cap the downside for crude oil prices.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $75.10 on Wednesday. The WTI price edges lower as investors are concerned about slower economic growth in the United States and China.
Data released by the Conference Board on Wednesday revealed that the US Consumer Confidence Index improved to 103.3 in August from an upwardly revised 101.9 in July. Nonetheless, consumers are more worried about the labor market after the Unemployment Rate reached a nearly three-year high of 4.3% last month.
Furthermore, fears of the economic health and future oil demand in China weigh on the crude oil price, as China is the world’s largest importer of oil. Daan Struyven, head of oil research at Goldman, noted demand in China has softened as the country switches from gasoline-powered cars to electric vehicles.
The US crude inventories declined last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending August 23 fell by 3.4 million barrels, compared to an increase of 0.347 million barrels in the previous week. The market consensus estimated that stocks would decline by 3.0 million barrels.
The downside for the WTI price might be limited amid the potential shutdown of Libya's oil production and geopolitical tensions in the Middle East. It's worth noting that Libya produces around 1.2 million barrels per day, with more than 1 million bpd exported to the global market. The developments surrounding Libya's output cuts have triggered further supply concerns and lifted the WTI price.
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