Oil Falls to Seven-Month Low as Demand Fears Overwhelm War Risks

(Bloomberg) -- Oil slumped to the lowest in almost seven months as concerns about demand in the world’s two biggest economies overshadowed heightened geopolitical risk.

Brent crude slid 3.4% to settle below $77 a barrel, the lowest settlement price since early January. Sentiment in the oil market has deteriorated as factory gauges in the US and China both showed contractions this week, signaling weakness in manufacturing. Losses for futures deepened after US payrolls data trailed expectations.

Oil posted its fourth straight weekly decline — the longest run since December — driven by the concerns about demand in China, the world’s biggest crude importer, and the US, the commodity’s top consumer. On the supply side, OPEC+ remains on track to boost production starting next quarter, a plan it reiterated at a monitoring meeting Thursday. Yet officials have insisted supply hikes can be paused or reversed as needed.

If the market softness continues, “core OPEC+ members might well decide to delay the phasing-out of cuts for another quarter — kicking the can down the road in the hope that demand improves,” said Callum Macpherson, head of commodities at Investec Plc.

Crude prices jumped Wednesday after the killing of Hamas and Hezbollah leaders stoked tensions in the Middle East. Futures also have gotten support recently from increased expectations that US monetary easing will boost consumption, with Federal Reserve Chair Jerome Powell suggesting an interest-rate cut could come as soon as September.

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