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Oil prices slipped in Asian trading on Monday, extending last month’s losses as traders discounted the likelihood of immediate supply disruptions from potential secondary sanctions on Russian crude and instead focused on Chinese factory data for demand cues.
- Brent October futures: $67.21 (-0.4%)
- WTI crude futures: $63.78 (-0.4%)
- August performance: Both contracts dropped over 7%, weighed by steady OPEC+ production hikes and fears of a supply glut.
Sanction Risks Lose Momentum
- Market reaction to renewed European calls for secondary sanctions on Russian oil buyers was muted.
- Analysts at ING noted that without U.S. backing, additional European measures may have limited impact.
- So far, Washington has only imposed secondary tariffs on India, raising duties to 50% from August 27, while key buyers like China remain unaffected.
Demand Outlook and Seasonal Factors
- U.S. fuel demand is expected to soften post-Labor Day, marking the end of the summer driving season.
- Rising OPEC+ output in coming months could further pressure balances if economic growth falters.
- Attention turned to Chinese PMI data, which gave a mixed picture:
- Official PMI: contracted again in August.
- Private survey (Caixin/RatigDog): showed factory activity rebounded at the fastest pace in five months.
Market Takeaway
The oil market faces a tug-of-war between fading supply disruption fears and an uncertain demand outlook, particularly in China. With OPEC+ supply rising and U.S. consumption set to cool, the near-term risk leans towards inventory builds unless global growth stabilizes.
