DTN Weekly Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued to slip Monday morning, following three consecutive weekly losses. As more data emerged over the past month casting doubt on the extent to which the Chinese economy will drive oil demand growth this year, oil bulls are hoping for looser monetary policies and OPEC+ walking back plans to hike output in the fourth quarter.

Policy meetings by the Bank of Japan, Bank of England and U.S. Federal Reserve Bank this week are set to bring more clarity around the direction of monetary policy. While the two-day Federal Open Market Committee (FOMC) meeting is unlikely to conclude in an interest rate cut, it may serve to confirm expectations around a September cut. According to CME's FedWatch Tool, 100% of investors now expect the first 25 basis point cut at the Sept. 18 meeting, and close to 96% expect no change at this week's meeting.

Recent year-on-year declines in Chinese crude oil imports and refiner demand served to confirm growing concerns surrounding demand growth, which were amplified by poor macroeconomic data releases over the past two weeks, including the weakest GDP growth rate in five quarters. The People's Bank of China's 10 basis point cuts to loan prime rates last week failed to move the needle.

While Thursday's OPEC+ JMMC meeting is unlikely to result in new policy recommendations, we may still hear a softer tone regarding potential output hikes in the fourth quarter and a stronger emphasis on these production increases being subject to market conditions.

Near 9:00 a.m. EDT, WTI futures for September delivery were trading near $77.03 barrel (bbl), down $0.13, and Brent for September delivery hovered around $80.93 bbl, down $0.20. RBOB and ULSD for August delivery dropped to $2.4524 gal and $2.4162 gal, respectively.

Karim Bastati can be reached at karim.bastati@dtn.com