Oil prices drop amid concerns over China’s economy and rising crude production
An oil tanker docks at a 300,000-ton crude oil terminal in Yantai, east China’s Shandong province, on May 17, 2021.
Costphoto | Barcroft Media | Getty Images
Oil prices fell on Monday amid concerns over China’s economy after a survey showed factory activity was growing at its slowest pace in 17 months in the world’s second-largest oil consumer , concern aggravated by an increase in oil production by OPEC producers.
Brent crude oil futures fell $ 2.16, or 2.9%, to trade at $ 73.24 a barrel, while US West Texas Intermediate (WTI ) fell $ 2.44, or 3.3%, to $ 71.51 a barrel.
“China is leading the economic recovery in Asia and if the pullback deepens, concerns will grow about a significant decline in the global outlook,” said Edward Moya, senior analyst at OANDA.
“The outlook for crude demand is on volatile ground and that is unlikely to improve until global vaccinations improve.”
Chinese factories activity grew in July at the slowest pace in nearly a year and a half as rising raw material costs, equipment maintenance and extreme weather conditions weighed on business activity, adding to concerns about a slowdown in the world’s second-largest economy.
Also weighing on prices, a Reuters survey found that the Organization of the Petroleum Exporting Countries (OPEC) oil production rose in July to its highest level since April 2020, as the group eased further production restrictions as part of a pact with its allies and the biggest Saudi exporter. Arabia has ended a voluntary reduction in supply.
As coronavirus cases continue to rise around the world, analysts said higher vaccination rates would limit the need for the severe shutdowns that ravaged demand during the peak of the pandemic last year.
The United States will not lock in again to curb Covid-19 but “things will get worse” as the delta variant fuels an increase in cases, mostly among the unvaccinated, America’s top infectious disease expert said on Sunday. Dr Anthony Fauci.
Meanwhile, India’s daily gasoline consumption topped pre-pandemic levels last month as states ease Covid-19 lockdowns while diesel sales were low, signaling industrial activity moderate in July.
In other news, the United States and Britain said on Sunday they believed Iran carried out an attack on an Israel-run tanker off the coast of Oman on Thursday that killed a Briton and a Romanian, and are committed to working with partners to meet.