Oil prices fell more than 1% on Monday, dropping for a third session, after official data showed that refining throughput and economic activity slowed in China in an indicator that fresh COVID-19 outbreaks are crimping the world’s no.2 economy.
U.S. West Texas Intermediate (WTI) crude dropped $1.89, or 2.77% to $66.03.
Factory output and retail sales growth slowed sharply in July in China, data showed, missing expectations as fresh outbreaks of COVID-19 and flooding disrupted business activity.
“Oil futures weakness… is likely triggered by weaker-than-expected growth data from China, which is a major consumer of oil,” said Kelvin Wong, market analyst at CMC Markets in Singapore. “All in all, the global peak growth narrative has been intensified.”
China’s crude oil processing last month also fell to the lowest on a daily basis since May 2020, as independent refiners cut production amid tighter quotas, elevated inventories and falling profits. China is the world’s biggest oil importer.
In Japan, the world’s fourth-biggest importer of crude oil, many analysts expect modest economic growth in the current quarter as state of renewed emergency restrictions to deal with record cases of infections weigh on household spending.
“We expect (Japan GDP) growth to remain under pressure in the third quarter as spending and production continue to struggle amidst disruptions from the pandemic,” Moody’s said.
The International Energy Agency on Thursday said rising demand for crude oil reversed course in July and was expected to increase at a slower rate over the rest of 2021 because of surging COVID-19 infections from the highly transmissible Delta strain.
Money managers reduced their net-long U.S. crude futures and options holdings in the week to Aug. 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Speculators also cut their futures and options positions in New York and London by 21,777 contracts to 283,601 over the period, the CFTC said.