Oil nears seven-week low on demand fears

Oil was steady near a seven-week low on a shaky demand outlook, especially in the biggest importer China, reports Bloomberg.Brent crude traded below $80 a barrel after losing more than 3.0 per cent over the previous two sessions, while West Texas Intermediate was around $76. Banks including Citigroup Inc have downgraded their growth forecasts for Asia’s biggest economy, while physical export prices of US oil heading to Asia are weakening.

Crude remains modestly higher for the year, aided by OPEC+’s supply cutbacks and expectations for lower borrowing costs in the US. An interest-rate decision from the Federal Reserve is due on Wednesday, while OPEC+ will hold a monitoring meeting a day later. The market is split on whether the cartel will proceed with a scheduled output increase next quarter.

Technical indicators are showing the latest move lower has been too quick, with both Brent and WTI now oversold on the nine-day relative strength index. Traders will look to an industry report on US stockpiles later on Tuesday to see whether they will extend a four-week drop.

Elsewhere, Venezuela’s opposition said they have proof of voter fraud, and that opposition candidate Edmundo González won Sunday’s election instead of incumbent Nicolas Maduro.In the Middle East, the US and other world powers sought to prevent a conflict between Israel and Hezbollah from escalating into a full-blown war after a rocket attack that killed a dozen young people in the Israeli-occupied Golan Heights.