WTI reverses gains on softer US, Chinese demand

The end of summer vacations in the US has led to lower demand for oil, with China’s recovery after lifting strict Covid-19 measures diminishing demand.

Saudi Arabia and Russia’s extended crude oil production have cushioned WTI’s price drop, causing it to trade at $82.45, below its opening price of $83.26.

The end of summer vacations and China’s slow recovery have weakened oil prices, with the US Consumer Price Index report for July focusing on the US Federal Reserve’s hawkish reaction. A strong US Dollar could weigh on US Dolllar-denominated assets like WTI.

The market is still optimistic as Wall Street closed higher. One of the factors that lowered oil prices was the end of the US summer vacation season because of weaker demand brought on by seasonal variables. The surge in oil was aided in the interim by China’s difficulties to recover following the release of Covid-19 zero-tolerance restrictions, but this recovery stalled as the year went on.