WTI languishes near $75 on soft global demand outlook

• The Oil price hovers near a seven-week low of around $75.00 as the global economic outlook appears to be dismal.
• German economy surprisingly contracted by 0.1% in the second quarter of this year.
• Investors await the Fed’s policy meeting and Caixin Manufacturing PMI for July.

West Texas Intermediate (WTI), futures on NYMEX, trade close to seven-week low near $75.00 in Tuesday’s European session. The Oil price continues to remain in the bearish trajectory amid growing worries over global demand outlook.

Investors remain concerned over China’s economic outlook due to vulnerable demand in domestic and overseas markets. China’s economic woes were prompted by slower-than-expected Q2 Gross Domestic Product (GDP) growth and an unexpected rate-cut decision by the People’s Bank of China (PBoC). Also, the absence of a booster dose in China’s Third Plenum deepened uncertainty over its economic revival. China is the world’s largest Oil importer and its economic vulnerability is unfavorable for the Oil price.

To address the dismal outlook, China’s Politburo, the country’s top leadership, has laid out economic priorities for the second half of this year.

Apart from China, investors lack confidence of upbeat OIL demand from the Eurozone and the United States (US) economy. World’s oldest continent is going through a rough phase amid weakness in the German economy. Flash Q2 GDP report showed that the Eurozone economy grew steadily by 0.3%. However, the German economy surprisingly contracted by 0.1%. This would leave the economic outlook as uncertain.

Also, investors worry that the US growth rate could be slower in the second-half of this year amid presidential elections.

In the near-term, the major triggers for the Oil price will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday and the Caixin Manufacturing PMI for July, which will be published on Thursday. The Fed is expected to keep interest rates unchanged in the range of 5.25%-5.50% but will likely deliver a dovish guidance on interest rates.