Oil Prices Drop As Gaza Ceasefire Talks Progress, China Releases Weak Economic Data

Author: Piero Cingari | August 16, 2024 09:14am

Oil prices, tracked by the United States Oil Fund (NYSE:USO), dropped sharply Friday morning, with West Texas Intermediate (WTI) light crude futures falling 3% below $76 per barrel at 8:00 a.m. in New York, as traders reacted to developments in Gaza ceasefire negotiations and disappointing economic data from China.

Talks between Israel and mediators began on Thursday and negotiators are set to reconvene in Doha, Qatar, on Friday to work towards a Gaza ceasefire agreement, which could help prevent further regional escalation, Reuters reported.

Hamas officials, who have accused Israel of stalling, did not attend Thursday’s talks. Mediators planned to consult with Hamas’ Doha-based negotiating team after the meeting, according to an official who spoke to Reuters.

Qatar’s prime minister advised Iranian leaders to hold off the anticipated attack on Israel to preserve the progress made during the two-day cease-fire and hostage release negotiations, the Washington Post wrote.

White House National Security Advisor John Kirby emphasized the urgency of finding an agreement, stating, “The remaining obstacles can be overcome, and we must bring this process to a close. We need to see the hostages released, relief for Palestinian civilians in Gaza, security for Israel, and lower tensions in the region. And we need to see those things as soon as possible.”

Meanwhile, the World Health Organization (WHO) and UNICEF have called for humanitarian pauses in the Gaza Strip for seven days to allow for two rounds of vaccination campaigns to prevent the spread of circulating variant type 2 poliovirus in the region.

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Disappointing Economic Data From China

Adding to the pressure on oil prices, China’s latest economic data revealed signs of a slowing economy.

• Industrial production grew by 5.1% year-on-year in July 2024, slightly missing market expectations of 5.2% and decelerating from a 5.3% increase in the previous month. This marks the third consecutive month of slowing industrial output growth, with July's figures representing the weakest performance since March.
• The country’s surveyed unemployment rate also edged up to 5.2% in July 2024 from 5% in the preceding three months, slightly exceeding market forecasts of 5.1%.
• Fixed-asset investment grew by 3.6% year-on-year from January to July 2024, falling short of both market expectations and the previous period’s growth rate of 3.9%.
• On the positive note, retail sales in China rose by 2.7% year-on-year in July 2024, marginally above market expectations of 2.6%. This figure shows an improvement from June’s 17-month low of 2.0% growth. On a monthly basis, retail activity increased by 0.35% in July, recovering from a revised 0.10% decline in the previous month.

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Posted In: USO