Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Crude Oil Lower; Demand Fears Raised by Weak PMI Data

Commodities Aug 01, 2022 09:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
+0.31%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+0.80%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GPR
-0.70%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Peter Nurse   

Investing.com -- Oil prices dropped Monday on increased concerns of a global slowdown ahead of the latest meeting of top producers to discuss future output levels.

By 9:35 AM ET (1335 GMT), U.S. crude futures traded 5.3% lower at $93.36 a barrel, while the Brent contract fell 4% to $99.75.

U.S. Gasoline RBOB Futures were down 4.2% at $2.9814 a gallon.

Data out over the weekend showed that Chinese factory activity shrank in July amid a fresh round of COVID-related lockdowns, with the country’s official purchasing manager’s index falling to 49.0 in July, indicating a contraction, from 50.2 in the previous month.

The news out of the rest of Asia wasn’t any better, as South Korea's factory activity fell for the first time in almost two years and Japan saw its slowest growth in activity in 10 months.

China is the world’s largest importer of crude, and a prolonged economic downturn there, not to mention the other regional economic powerhouses, is likely to weigh on global oil demand.

Manufacturing is already in contraction in the Eurozone owing to the acute energy crisis and accompanying inflation problem, and those factors also appear to be hitting the consumers as German retail sales slumped to the biggest annual drop since the country started collecting pan-German data in 1994.

The Institute for Supply Management’s manufacturing PMI will be released at 10:00 AM ET and is also expected to show a modest slowdown from June, albeit staying clearly in growth territory.

Turning to the supply side of the equation, the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, is set to meet on Wednesday to discuss future production levels.

The members have now unwound the record 9.7 million barrels per day supply cut they agreed on in April 2020, when the COVID-19 pandemic hit demand, and this creates a degree of uncertainty over what they will decide to do.

The U.S. has been urging the group to increase production, with President Joe Biden saying that he expected “further steps” from the de facto leader of the group, Saudi Arabia, at the end of his trip to the Middle East two weeks ago to press his case. 

However, most OPEC+ members will find it difficult to substantially increase production further because of basic infrastructure issues, and they will also be wary of feeding more barrels into a volatile global market at a time when they desperately need the revenue derived from the high oil prices.

“From our vantage point, however, the OPEC + meeting doesn't seem likely to rock the boat and be a significant oil price catalyst,” said Stephen Innes, managing partner at SPI Asset Management.

“OPEC+ seems more likely to signal a willingness to continue cooperating long-term, but it would be a surprise if the upcoming meeting resulted in a significant policy shift.”

Crude Oil Lower; Demand Fears Raised by Weak PMI Data
 

Related Articles

Oil up near $90 as OPEC+ considers output cut
Oil up near $90 as OPEC+ considers output cut By Reuters - Sep 29, 2022 1

By Shariq Khan NEW YORK (Reuters) -Oil prices rose on Thursday for a second day, briefly touching $90 per barrel as leading OPEC+ members were discussing an output cut next week,...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Robert Murphy
Robert Murphy Aug 01, 2022 12:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah... Okay... It’ll be cool when we run out. Lmao. This is a joke..
Andrew Sim
Andrew Sim Aug 01, 2022 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
fear of losing out indeed
Sylvia Doloff
Sylvia Doloff Aug 01, 2022 10:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
total tank job oil and energy get ready to sell off
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email