Updated at 8:14 am EST
Global oil prices slumped lower Monday following disappointing economic data from China that could re-set bets on demand from the world’s biggest crude importer.
China published data on Sunday showing slower-than-expected retail sales growth, a disappointing pace of industrial production and softer-than-forecast government investment as Beijing struggles to establish any momentum for the world’s second-largest economy amid its ‘zero Covid’ health policies.
Oil markets are also seeing a notable ramp-up in supply, with U.S. output rising to the fastest pace in more than two years last week, according to data from the Energy Department, at 12.2 million barrels per day .Refining input running at the highest levels since January of 2020. Domestic stockpiles also rose by a larger-than-expected 5 million barrels,
Investors are also fading bets on near-term demand following last week’s brief move near $100 a barrel for Brent crude, with data from the CME Group showing speculators cutting bullish bets by around 14% last week, pegging them near to pre-Coivd lows.
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“Sentiment in the oil market remains fairly negative,” said ING’s head commodity strategy Warren Patterson. “Not helping the oil market this morning is Chinese output data for July, which showed that domestic refiners processed the least crude oil since March 2020, whilst apparent oil demand also fell, by almost 10% year-on-year.”
“Clearly, given China’s Covid policy, Chinese oil demand remains a downside risk for the market,” he added.
WTI futures for September delivery, which are closely linked to U.S. gas prices, were marked $4.39 lower in early New York trading to change hands at $87.60 per barrel.
Brent crude contracts for October, the global pricing benchmark, fell $4.86 to $93.28 per barrel.
The moves are likely to add further downward pressure to U.S. gasoline prices, which the American Automobile Association pegged at $3.956 per gallon last night, the lowest since early March and extending a run of 59 consecutive days of declines.
“With more cash in their pockets this is relieving some of the strain on household finances and is already translating into more people movement around retail and recreation based on Google mobility data,” said ING’s chief international economist James Knightley. “This in turn points to a decent uptick in consumer spending in the current quarter.”
Source: https://www.thestreet.com/markets/oil-prices-slide-below-90-as-china-demand-fades-us-output-rises?puc=yahoo&cm_ven=YAHOO&yptr=yahoo