By Yuka Obayashi
TOKYO (Reuters) – Oil prices eased in early Asian trade on Monday as fears of weaker demand in top oil importer China weighed on market sentiment while investors focused on progress in Middle East ceasefire talks, which could reduce supply risks.
Brent crude futures were down 13 cents, or 0.2%, at $79.55 a barrel by 0032 GMT. U.S. West Texas Intermediate crude futures were down 13 cents, or 0.2%, at $76.52 a barrel.
Both benchmarks fell nearly 2% last Friday as investors dampened expectations of demand growth from China, but ended the week largely unchanged from a week earlier after a series of U.S. data last week showed inflation subdued and retail spending robust.
“Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that another factor was the nearing end of the high US driving season.
“Yet it is tensions in the Middle East and the escalation of the war between Russia and Ukraine, which pose supply risks, that are supporting the market,” he said.
On Thursday, data from China showed its economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial output slowing and unemployment rising.
That has raised concerns among traders about a slowdown in demand from China, where refiners sharply cut crude processing prices last month due to tepid demand for the fuel.
Meanwhile, US Secretary of State Antony Blinken arrived in Tel Aviv on Sunday on another Middle East tour to push for a ceasefire in Gaza, but Hamas cast doubt on the mission by accusing Israel of undermining his efforts.
The mediating countries – Qatar, the United States and Egypt – have so far failed to narrow enough differences to reach an agreement during months of on-and-off negotiations, and violence continued unabated in Gaza on Sunday.
(Reporting by Yuka Obayashi; Editing by Stephen Coates)