Oil futures rebounded more than $1 a barrel from 7-week lows on Wednesday after the killing of Hamas leader Ismail Haniyeh in Iran ratcheted up tensions in the Middle East, but prices stayed under pressure from concerns about weak China demand.
Oil fell 2% in the previous session after Israel signalled that its response to a rocket strike in Israeli-occupied Golan Heights on Saturday would be calculated to avoid dragging the Middle East into an all-out war.
Persistent concerns over slowing growth and demand in top importer China have been the dominant factor, part triggered by GDP data from last week, which showed the Chinese economy grew less than expected in the second quarter.
Oil prices fell to a six-week low on Tuesday, with Brent closing at its lowest level since June 9 on ceasefire talks between Israel and Hamas in a plan outlined by U.S. President Joe Biden in May and mediated by Egypt and Qatar.
Oil prices steadied on Tuesday after falling for the past two sessions, as investors remained cautious amid expectations of plentiful supplies and weak demand, while brushing off the U.S. presidential campaign upheaval.
The U.S. Federal Reserve is due to review policy next on July 30-31, when investors expect it to keep rates unchanged. But they will look for further evidence that a cut will happen at the September meeting.
Oil prices fell in Asian trade on Friday, and were headed for a weekly loss amid persistent concerns over slowing demand in top importer China, while sentiment was also dented by concerns over trade ructions with the U.S.
Additionally gold saw increased safe haven demand after a Bloomberg report said the U.S. was considering stricter trade restrictions on China, especially against the country’s technology and chipmaking sectors.
The yellow metal’s recent advance was fueled chiefly by increased bets that the Fed will begin cutting rates by September, following soft inflation readings and somewhat dovish signals from the central bank.
The market, however, is still awaiting clearer signs of action. While Fed Chair Jerome Powell acknowledged the recent improving trend in price pressures, he told lawmakers that more data was needed to strengthen the case for rate cuts.
