Oil prices extend decline on Chinese demand worries (NYSEARCA:USO)

Crude oil futures fell Tuesday for a third straight session on continued market concern over bearish economic data out of China and its impact on energy demand, although declines were held in check by a growing consensus that the U.S. Federal Reserve could begin cutting interest rates as soon as September.

China’s statistical agency said the country’s economy expanded at a 4.7% annual pace in Q2, down significantly from the previous quarter’s 5.3% growth, and that China processed 58.32M tons, or 14.2M bbl/day, of crude in June, which Commerzbank’s Carsten Fritsch said was the lowest daily level in six months.

Crude oil processing in China for H1 was 0.4% lower than in the same period a year ago, Fritsch said, according to Marketwatch, noting the last such decline came two years ago when full-year demand fell due to COVID-19 lockdowns.

“If you don’t have a positive catalyst, the default is to worry about China, and that’s what we’re doing because the data has been bad,” CIBC Private Wealth US senior trader Rebecca Babin said, according to Dow Jones.

Weaker refining margins are an indication of softening product demand, and “we’re in a market where every signal that’s not positive is a concern about demand, and the data will have to prove that it’s not a demand problem,” Babin said.

Front-month Nymex crude (CL1:COM) for August closed -1.4% to $80.76/bbl, and front-month September Brent (CO1:COM) ended -1.3% to $83.73/bbl, the lowest settlement values since June 21 and June 14, respectively.

Also, front-month August Nymex Natural Gas (NG1:COM) finished +1.4% to $2.188/MMBtu, following Monday’s drop to a more than two-month low.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

Freeport LNG said Tuesday it is working toward a “phased restart” of its liquefaction operations after the plant on the Texas Gulf coast sustained damage during Hurricane Beryl last week.

Freeport LNG’s production levels will be “at reduced rates for a period of time” while repairs continue, the operator said.

Also, the U.S. Court of Appeals for the District of Columbia ordered the Federal Energy Regulatory Commission to reassess the impact of greenhouse gas and other emissions from Commonwealth LNG’s liquefied natural gas project in Louisiana, Reuters reported.

The court did not vacate FERC’s previous approval of the project as it ordered another look at the emissions impact.

Commonwealth LNG has not yet made a final investment decision on the project; if developed, it is expected to begin shipping 9.5M tons/year of LNG in 2027.