Chinese GDP weighs on oil demand, causing a slide of over 1%.
Oil Drops Over 1% as Chinese Economic Growth Disappoints
By Alex Lawler
London (Reuters) - Oil prices fell by more than 1% on Monday following weaker than expected Chinese economic growth, raising concerns about demand in the world’s second-largest oil consumer. Additionally, a partial restart of halted Libyan output added further pressure.
Chinese GDP Growth Falls Short of Expectations
China’s gross domestic product (GDP) grew by 6.3% year on year in the second quarter, below analyst forecasts of 7.3%. The country’s post-pandemic recovery is faltering rapidly due to weakening demand both domestically and internationally.
“The GDP came in below expectations, so it will do little to ease concerns over the Chinese economy,” said Warren Patterson, ING’s head of commodities research.
Oil Prices Decline
Brent crude dropped $1.39, or 1.7%, to $78.48 a barrel by 1015 GMT, while U.S. West Texas Intermediate crude fell by $1.34, or 1.8%, to $74.08. This marks the second consecutive day of losses for both contracts.
“China data was always looked forward to with a degree of hope; well, for bulls anyway,” John Evans of oil broker PVM said in a report. “However, the contemporary economic backdrop for Asia’s driver seems to now be wheeled out for the bears.”
Factors Influencing Oil Prices
Oil briefly rose after a Reuters news alert on Saudi Arabia extending a voluntary output cut. However, the alert was subsequently withdrawn as it repeated news published on June 4.
Both benchmarks had experienced three weeks of gains and reached their highest levels since April last week, supported by OPEC+ output curbs and unplanned outages in Libya and Nigeria.
Oil also faced pressure on Monday due to the resumption of output at two of the three Libyan fields that were shut down last week. The halt in production was a result of a protest against the abduction of a former finance minister.
In another sign of tighter supplies, Russian oil exports from western ports are expected to decrease by 100,000-200,000 bpd next month. This indicates that Moscow is fulfilling its pledge for supply cuts in coordination with Saudi Arabia, according to two sources.
(Reporting by Alex LawlerAdditional reporting by Florence Tan and Mohi NarayanEditing by David Goodman)
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