Crude oil prices declined further early on Tuesday after more economic reports from China suggested weaker-than-expected economic growth.
Brent crude slipped below $80 a barrel, with West Texas Intermediate trading just above $75 per barrel earlier today. This move in prices came as Reuters reported on a poll among economists expecting China’s manufacturing activity to shrink for the third month in a row.
Staying with China, Citi cut its outlook on the country’s economy yesterday, now expecting GDP growth at 4.8%, down from 5% in an earlier forecast, after second-quarter growth came in below predictions.
In some bullish news, ANZ analysts noted that the outcome of the Venezuelan elections could lead to lower global supply if the United States tightens its sanctions on Caracas. The country’s electoral authority declared Nicolas Maduro the winner of the presidential vote but the opposition is claiming it won 73% of the votes.
“Nicolas Maduro’s victory in the latest Venezuelan election is a headwind for global supply, as this could result in tighter US sanctions,” ANZ said in a note, as quoted by Reuters, estimating the potential effect of tighter sanctions at between 100,000 and 120,000 bpd in daily Venezuelan output.
Later in the week prices could move in either direction, with a Fed meeting scheduled for Wednesday that could reignite hopes of an interest rate cut before the end of the year. A day later, OPEC is holding a monitoring meeting and, according to Bloomberg, some market players appear to expect it might decide to roll back some of the production cuts.
In reality, this is extremely unlikely in the current price environment, as the cartel made a note of saying the rollbacks will only be implemented if the market environment is right, meaning prices are high.
By Irina Slav for Oilprice.com
