Global crude oil prices settled down nearly two per cent in the previous session, with Brent crude below $80 a barrel, as investors tempered expectations of demand growth from top oil importer China. Crude oil prices were little changed on the week after Wall Street lifted US Fed's interest rate cut bets.

Brent crude futures fell $1.36, or 1.7 per cent, to settle at $79.68 per barrel. US West Texas Intermediate crude futures declined by $1.51, or 1.9 per cent, to $76.65. Last week, Brent crude ended at $79.66 a barrel, and WTI closed at $76.84. Regarding domestic prices, crude oil futures settled 0.6 per cent lower at ₹6,448 per barrel on the multi-commodity exchange (MCX).

India imports $2.8 bn crude oil from Russia in July, almost 40% of total oil purchases

What's weighing on crude oil prices?

-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 stoked worries among traders about a slump in demand from the top oil importer, where refineries sharply cut crude processing rates last month on tepid fuel demand.

-The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for this year's oil demand growth on Monday, citing softness in China. The Paris-based International Energy Agency (IEA) also cited weak demand in China when it slashed its 2025 forecasts on Tuesday.

-Analysts said that it had been a volatile week in oil markets. On the one hand, there were fears of supply disruptions from a wider Middle East war. Still, slowing growth in China forced revisions of demand forecasts. Analysts added that low liquidity likely fed price volatility this week as many European and North American investors were still on holiday.

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-Oil futures rallied at the start of the week as traders braced for retaliation by Iran against Israel over the slaying of a Hamas leader in Tehran last month. However, some of that risk was priced out because Iran has not struck yet. Analysts said that supply disruptions in the oil market have been more theoretical than actual, allowing the market to focus on demand.

-A fresh round of Gaza ceasefire talks began on Thursday in Qatar. They have been paused until next week, with involved parties sending mixed signals on progress. Analysts said that provided the situation in the Middle East does not escalate further, the oil price is likely to tread water.

-A string of data releases from the US kept a floor under oil prices: retail sales beat analysts' expectations, and fewer Americans filed new jobless claims last week, sparking renewed optimism around economic growth in the biggest oil market. Oil prices could lack direction until the US Federal Reserve decides whether to cut interest rates at its September meeting.

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Where are prices headed?

‘’Oil prices slipped to $76.83/bbl on Wednesday due to expectations that Iran might refrain from attacking Israel, coupled with an unexpected 1.4 million-barrel increase in US oil inventories,'' said Kaynat Chainwala, AVP-Commodity Research, Kotak Securities

‘’Markets are closely monitoring the Israel-Iran situation, with reports that US President Biden has dispatched three top Middle East advisers to the region this week to help delay potential Iranian and Hezbollah military retaliation against Israel,'' added Chainwala.

Analysts said that prospects of possible Federal Reserve rate cuts in upcoming policy meetings also bolstered crude oil prices. However, gains are capped by an unexpected build in US oil inventories and mixed economic data from China. 

‘’Chinese industrial production grew at a slower pace than anticipated, while the unemployment rate climbed to 5.2 per cent last month, up from five per cent in the previous month. We anticipate that crude oil prices will remain volatile. Crude oil has support at $76.30-75.60 and resistance at $77.50-78.20. In INR, crude oil has support at ₹6,410-6,350 and resistance at ₹6,555-6,610,' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.