In a tumultuous start to the weekend, oil prices experienced a sharp decline, with West Texas Intermediate (WTI) light crude futures falling 3% below $76 per barrel. Traders reacted to updates on Gaza ceasefire negotiations and disappointing economic data from China, causing instability in the oil market.

Talks between Israel and mediators commenced on Thursday, with negotiators set to reconvene in Doha, Qatar, on Friday to work towards a Gaza ceasefire agreement. The aim is to prevent further regional escalation, and Reuters reports that mediators plan to consult with Hamas' Doha-based negotiating team. However, officials from Hamas, who have accused Israel of stalling, did not attend Thursday's meetings.

Qatar's Prime Minister also advised Iranian leaders to postpone an anticipated attack on Israel in order to preserve the progress made during the two-day ceasefire and hostage release negotiations, as reported by The Washington Post. This reiterates the urgency for finding an agreement, emphasized by White House National Security Advisor John Kirby, who expressed the need for the release of hostages, relief for Palestinian civilians in Gaza, security for Israel, and lowering tensions in the region.

Simultaneously, the World Health Organization (WHO) and UNICEF have issued a joint call for humanitarian pauses in the Gaza Strip for seven days. This request aims to facilitate two rounds of vaccination campaigns to prevent the spread of circulating variant type 2 poliovirus in the region. This highlights the pressing need for temporary halts in the conflict to prioritize public health amidst ongoing tensions.

Adding to the pressure on oil prices, China's latest economic data reveals signs of a slowing economy. Industrial production in July 2024 grew by 5.1% year-on-year, slightly missing market expectations of 5.2%. This represents the third consecutive month of deceleration in industrial output growth, marking the weakest performance since March. The surveyed unemployment rate also edged up to 5.2% in July 2024, slightly exceeding market forecasts of 5.1%. Furthermore, fixed-asset investment from January to July 2024 grew by 3.6% year-on-year, falling short of market expectations and the previous period's growth rate of 3.9%.

Amidst this economic slowdown, there is a glimmer of hope as retail sales in China rose by 2.7% year-on-year in July 2024, marginally surpassing market expectations of 2.6%. This figure indicates an improvement from June's 17-month low of 2.0% growth. On a monthly basis, retail activity increased by 0.35% in July, bouncing back from a revised 0.10% decline in the previous month.

As tensions rise in Gaza and China's economy shows signs of strain, the global oil market remains sensitive to these developments. Traders and analysts will closely monitor the progress of ceasefire negotiations in the region and analyze the implications of China's economic deceleration on future oil prices.