Oil falls on fears of a slowdown in China and a jump in OPEC production | Business and Economics News | World Weekly
Factory activity growth in China fell sharply in July with demand contracting for the first time in more than a year.
Oil prices fell on Monday amid concerns about the Chinese economy after a survey showed that factory activity growth fell sharply in the world’s second largest oil consumer, as fears of increased oil production from the Organization of the Petroleum Exporting Countries (OPEC) or OPEC producers exacerbated.
Brent crude futures were down 76 cents, or 1%, at $74.65 a barrel by 04:55 GMT, while US West Texas Intermediate crude futures were down 69 cents, or 0.9%, at $73.26 a barrel after falling to their lowest level in session. $72.87.
“China has been leading the economic recovery in Asia, and if the downturn deepens, fears will increase that the global outlook will see a significant decline,” said Edward Moya, senior analyst at OANDA.
“The crude demand outlook is on shaky ground and that probably won’t improve until global vaccines improve.”
A business survey on Monday showed growth in China’s factory activity fell sharply in July as demand contracted for the first time in more than a year, partly due to higher product prices, highlighting the challenges facing the global manufacturing hub.
The weaker results in the private survey, which mostly covers export-oriented and small manufacturers, are broadly in line with those in an official survey released on Saturday that showed activity growing at the slowest pace in 17 months.
Also affecting prices, a Reuters survey found that oil production from OPEC rose in July to its highest level since April 2020, as the organization eased production restrictions under an agreement with its allies while Saudi Arabia, the largest oil exporter, canceled a voluntary supply cut.
Across the Asia-Pacific region, the highly contagious delta type, which was first spotted in India, continues to reverberate, hampering expectations of mobility. China has seen a slight increase in the number of cases, Thailand is preparing to expand its semi-closed measures, and infections in Sydney’s hotspot are setting a record.
As coronavirus cases continue to rise globally, analysts said high vaccination rates will curb the need for the harsh shutdowns that destroyed demand during the pandemic’s peak last year.
The United States will not shut down again to curb COVID-19, Dr. Anthony Fauci, the top US infectious disease expert, said on Sunday, but that “things are only going to get worse” as the delta variable fuels an increase in cases, most of them among the unvaccinated.
India’s daily gasoline consumption surpassed pre-pandemic levels last month as states eased COVID-19 lockdowns while gas and oil sales were low, suggesting a dip in industrial activity in July.
The United States and Britain said on Sunday they believed Iran launched an attack on an Israeli-operated petroleum products tanker off the coast of Oman on Thursday that killed a Briton and a Romanian, and vowed to work with partners to respond. The standoff comes as the two countries seek to revive a nuclear deal that, if successful, could pave the way for an end to US sanctions on official Iranian oil flows.