Oil prices continued to decline for a second consecutive session on Monday as China’s second-quarter growth fell below expectations. This raised concerns about demand in the world’s second-largest oil consumer. Additionally, Libya resumed oil production over the weekend, adding further pressure on prices.
Brent crude futures dropped by 1.1 percent to $78.96 a barrel, while U.S. West Texas Intermediate crude decreased by 1.1 percent to $74.55 a barrel.
China’s gross domestic product (GDP) grew by 6.3 percent year on year in the second quarter, according to data released by the National Bureau of Statistics. This was lower than the forecasted growth rate of 7.3 percent, indicating a rapid faltering of China’s post-pandemic recovery due to weakening demand at home and abroad.
“The GDP came in below expectations, so it will do little to ease concerns over the Chinese economy,” said Warren Patterson, head of commodities research at ING.
READ: China’s Q2 GDP growth slows to 0.8% q/q, raises stimulus expectations
Chinese refineries processed 1.6 percent more crude oil daily in June compared to May, as they ramped up operations after spring maintenance. This was in line with strong imports by the world’s top crude importer last month.
“Apparent oil demand grew at a strong pace year on year, but the market seems focused on the headline (GDP) numbers,” commented Patterson.
Beijing is expected to be cautious in implementing any new stimulus measures, as it is wary of driving up commodities prices. Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, said, “They are stockpiling crude at low prices and waiting for a recession to hit the West before going full-on with stimulus.”
Oil prices softened after last week’s gains, which saw both benchmarks reaching their highest levels since April. This was due to output shutdowns in Libya and Shell’s halt in Nigerian crude exports, which tightened supply.
READ: Oil slips after Libya resumes output, China data eyed
Two of the three Libyan oilfields that were shut down on Thursday, the Sharara and El Feel with a total production capacity of 370,000 barrels per day, resumed operations on Saturday evening. However, the 108 field remained closed due to protests against the abduction of a former finance minister.
In Russia, oil exports from western ports are expected to decrease by 100,000-200,000 barrels per day next month compared to July. This is seen as a sign that Moscow is fulfilling its pledge to cut supply along with OPEC leader Saudi Arabia.
READ: Russian oil exports hit near three-year high in March: IEA
“Crude was in overbought territory at 12-week highs. The prop from the financial markets, which were cheering renewed expectations of a ‘soft landing’ for the U.S. economy, was temporary,” stated Vandana Hari, founder of oil market analysis provider Vanda Insights. She added that the pullback has already begun and is likely to continue as economic concerns take the spotlight again.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
