The September Brent futures contract saw weakness early this morning, falling to $84.75/bbl at 08:40 BST. Since then, the Sep flat price found support and rallied to $85.10/bbl as of 11:20 BST but fell again to $84.95/bbl as of 11:30 BST (time of writing). While the usual negative correlation between the USD and oil has not been too robust lately, speculation remains that the pressure noted in Brent today partly stems from a stronger dollar following an attempt to assassinate former US President Donald Trump. However, while the DXY rallied to 104.30 last night, it has since come off to 104.07. We may be witnessing further pressure on oil prices amid a slowdown in China’s economy. An official data release showed that China’s economy grew 4.7% in Q2’24 (prev: 5.3%, Reuter’s forecast: 5.1%) its slowest since Q1’23. This decline emerged from the consumer sector, with retail sales growth slowing to 2% (forecast: 3.3%), an 18-month low. In addition, China’s new home prices in June fell by 4.5% y/y (prev: 3.9%) and 0.7% m/m (prev: 0.7%) to their lowest since June 2015. In other news, Kuwait Petroleum Corporation (KPC) announced that it made a “giant” oil discovery in the Al-Nokatha field, with an estimated 3.2 billion barrels in oil reserves. The initial estimate of the oil well is reportedly around 96 square km. Finally, the market will be awaiting further clarity on the US political front with the Republican National Convention this week, with the party likely to select Donald Trump as their nominee for the Presidency and the presumptive nominee communicating his choice for Vice President. At the time of writing, the front-month and six-month Brent futures spreads stand at $0.90/bbl and $3.80/bbl, respectively.
