Global Oil Prices Inched Down amid China's Slowing Economy

TEMPO.CO, Jakarta - World oil prices fell on Tuesday, July 16. Reuters reported that Brent crude fell 9 cents, or 0.1 percent, to US$84.76 per barrel, while West Texas Intermediate (WTI) crude fell 13 cents, or 0.2 percent, to US$81.78 per barrel.

Reuters wrote that the drop in global oil prices was due to concerns over declining demand from China amid the country's economic slowdown. In the second quarter of 2024, China's economy grew at a much slower rate than forecast, triggered by a prolonged property downturn and job insecurity.

In April-June 2024, China's economy was recorded to have grown 4.7 percent, the slowest since Q1/2023 and below the 5.1 percent estimated in a Reuters poll.

China's oil refinery output also fell 3.7 percent in June. The three-month drop in output was due to planned maintenance. Meanwhile, lower refining margins and sluggish fuel demand are prompting independent mills to cut production.

Meanwhile, Fed chair Jerome Powell said that U.S. inflation readings in the second quarter of this year slightly increased confidence that the rate of price increases was returning to the central bank's target on a sustainable basis. His statement was interpreted by market players as an indication of a shift to lower interest rates, possibly soon. Lower interest rates are expected to lower borrowing costs, allowing economic activity and oil demand to increase.

RIRI RAHAYU

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