Oil closes lower amid demand concerns

Oil drilling rigs

Oil declined today, Aug. 21, amid growing concerns about the demand outlook in China and the Federal Reserve's continued tightening of the monetary policy.

Last week, oil prices settled lower, snapping a seven-week winning streak.

"Increases in interest rates by the Federal Reserve to control inflation are leading to a decline in economic activity in the United States, while China continues to slow down, heading back to pre-pandemic levels," said John Kilduff, Partner at Again Capital, a consulting firm.

China’s financial regulators, during a meeting with bank executives, called for increasing the volume of lending to support the economic recovery, in light of the growing concerns among policymakers about the impact of the deteriorating economic situation on growth.

The People’s Bank of China cut the one-year loan prime rate, a benchmark for corporate loans, from 3.55% to 3.45%, against expectation of a 15 basis points reduction. This is the second time in three months that China reduced this rate, in light of the authorities’ efforts to stimulate demand for credit and support recovery in the world's second largest economy.

Chinese customs data showed that Saudi Arabia's exports to China decreased by 31% on a monthly basis in July, while Russia occupied the forefront of oil suppliers to the Asian country.

Meanwhile, global spending on renewable energy reached a record level during the first six months of this year, amounting to $358 billion. China alone accounted for half of the volume of global investments in this field, followed by the US in second place by a wide margin, Bloomberg NEF reported.

Separately, the Iraqi oil minister is scheduled to meet with his Turkish counterpart to discuss energy issues, especially the resumption of Iraqi oil exports through the Turkish port of Ceyhan, Reuters reported, citing an official.

The people of Ecuador voted in a referendum to stop the development of all new oil wells in the Yasuni National Park in the Amazon region, which is one of the most biologically diverse regions on the planet. This move keeps about 726 million barrels of oil below ground, CNN reported.

Brent crude futures for October delivery fell 0.4%, or 34 cents, at $84.46 a barrel, after it rose during the session to $85.86.

WTI crude for October delivery decreased by 0.65%, or 54 cents, to record $80.12 per barrel, after it touched $81.75 during trading.