Oil prices fall on concerns about demand in China and easing concerns about the Middle East

By Colleen Howe

BEIJING (Reuters) – Oil prices fell in early Asian trading on Tuesday, extending losses from the previous session, due to concerns about Chinese demand and as the market ignored the risk of escalating conflict in the Middle East .

Brent crude oil futures fell 12 cents or 0.15% to $79.78 a barrel at 00:33 GMT. U.S. crude oil futures fell 14 cents, or 0.18%, to $75.67 a barrel.

A series of disappointing economic news out of China has recently shaken markets. China’s manufacturing activity likely shrank for a third month in July, a Reuters poll showed on Monday.

Also on Monday, Citi cut China’s growth forecast from 5% to 4.8% after its growth fell short of analysts’ estimates in the second quarter, noting that economic activity slowed further in July .

The market is paying attention to an upcoming meeting of China’s main decision-making body, the Politburo, scheduled for this week, which could spark more support for economic policy.

But expectations are limited after the Third Plenum, an important political meeting held in mid-July, largely reiterated existing economic policy objectives and failed to improve market sentiment.

Oil fell 2% in the previous session after Israel signaled that its response to Hezbollah’s rocket attack on the Israeli-occupied Golan Heights on Saturday would be calculated to avoid dragging the Middle East into an all-out war.

This was reinforced by a US diplomatic effort, reported by Reuters on Monday, to constrain Israel’s response and prevent it from attacking the Lebanese capital, Beirut, or any key civilian infrastructure in retaliation.

In Venezuela, the opposition said it had obtained 73% of the votes, despite the national electoral authority declaring incumbent Nicolás Maduro the winner of the elections, giving him a third term.

“Nicolas Maduro’s victory in the latest Venezuelan elections is a headwind for global supplies as it could result in tighter US sanctions,” ANZ analysts said in a note, estimating this could reduce Venezuela’s exports by 100,000-120,000 barrels. per day.

Governments in Washington and elsewhere have cast doubt on the results and called for a full vote count, and protesters gathered in towns and cities across Venezuela on Monday.

(Reporting by Colleen Howe; Editing by Sonali Paul)