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Oil settles lower on weak economic Chinese economic data

Commodities Aug 15, 2022 03:46PM ET
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© Reuters. FILE PHOTO - A pump jack is seen surrounded by steam during sunset at a PetroChina's oil field in Karamay, Xinjiang Uigur Autonomous Region January 5, 2011. REUTERS/Stringer
 
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By Laura Sanicola

(Reuters) -Oil prices settled lower on Monday after disappointing Chinese economic data renewed concerns of a global recession that would be expected to reduce fuel demand.

Brent crude futures settled down $3.05, or 3.1%, to $95.10 a barrel after dropping 1.5% on Friday.

U.S. West Texas Intermediate crude settled down $2.68, or 2.9%, at $89.41 after dropping 2.4% in the previous session.

Brent futures were close to their lowest since before Russia sent troops into Ukraine on Feb. 24, while WTI futures touched their lowest on Monday since early February.

The central bank in China, the world's largest crude importer, cut lending rates to revive demand as data showed the economy slowing unexpectedly in July, with factory and retail activity squeezed by Beijing's zero-COVID policy and a property crisis.

The country's refinery output slipped to 12.53 million barrels per day (bpd), its lowest since March 2020, government data showed.

ING bank cut its forecast for China's 2022 GDP growth to 4%, down from a previous projection of 4.4%, and said a further downgrade was possible.

Brent crude open interest this month is down 20% from August last year.

"Open interest is still falling, with some (market players) not interested in touching it because of volatility. That is, in my view, the reason resulting in higher volumes to the downside," UBS oil analyst Giovanni Staunovo said, adding that the trigger for the drop on Monday was weak Chinese data.

The U.S. dollar index, meanwhile, rose near to the middle of its range this month.

Oil is generally priced in U.S. dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies.

Talks to revive the 2015 Iran nuclear deal were also in focus on Monday. Oil supply could rise if Iran and the United States accept an offer from the European Union, which would remove sanctions on Iranian oil exports, analysts said.

Iran will respond by midnight on Monday to the European Union's "final" draft text to save a 2015 nuclear deal, its foreign minister said, calling on the United States to show flexibility to resolve three remaining issues.

A damaged oil pipeline component that disrupted output at several offshore U.S. Gulf of Mexico platforms was repaired late Friday, prompting oil producers to reactivate some of the halted production, a Louisiana official said last week.

"Supply disruptions at several offshore oil platforms within the Gulf coast region that added to last week’s price strength appear to have stabilized for now with output resuming," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Oil settles lower on weak economic Chinese economic data
 

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Comments (7)
Joju Chack
Joju Chack Aug 16, 2022 1:01AM ET
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When the schools reopen, you'll know.
BD
BD Aug 15, 2022 8:36PM ET
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Great news. Oil down means inflation continues down. Jobs market great. There is no recession + inflation down = massive market rally back to the all time highs. I'm already up 50% since the June lows.
Steve Uzor
Steve Uzor Aug 15, 2022 8:36PM ET
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could you enlighten me on your analysis please?
jamie
jamie Aug 15, 2022 2:17PM ET
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Even I don't know US is in recession, I do know EU, GB, China, Japan are very clearly in recession. Does US stock market believe US economy can goes? I think this rally is like a game that hand over bomb to others, and the rule is last buyer will be passed away with unpredictable bomb burst.
jamie
jamie Aug 15, 2022 2:17PM ET
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I decide not to be the last buyer. How about you? Seriously I ask you to think it over before you trade in this market. It's greed itself.
First Last
First Last Aug 15, 2022 2:17PM ET
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jamie   "last buyer"?  That'll take a nuclear holocaust.
jamie
jamie Aug 15, 2022 7:52AM ET
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What happen? Today is the 1st day of Recession?
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First Last
First Last Aug 15, 2022 7:52AM ET
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jamie  Saudi Arabia is a net crude producer.  How is Saudi weakened by recent high oil prices?    "accelate oil price down" --  I believe if OPEC does NOT reduce supply, just keep to plan, oil price will remain remain high regardless of China.   Keep in mind EU/US/West want to further reduce imports from Russia, and Russia has been reducing supply and may do so more.
jamie
jamie Aug 15, 2022 7:52AM ET
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You miss the point. Oil price under 90 is no more high price and at that time I believe Saudi has to think over their only export product management, I mean price.
First Last
First Last Aug 15, 2022 7:52AM ET
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jamie   Saudi wants crude prices to be both high and sustainable.  And wants the West on its side against Iran.
jamie
jamie Aug 15, 2022 7:52AM ET
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처음 마지막 I have no idea why you think that Saudi want to stand with US side? In political, economical reason he has advantage to stand with Russia and China in this time. Oh, you are talking about nuclear threat of Iran? Never mind. In that case, Israel will do everything including full scale war to Iran, before Saudi does in action.
First Last
First Last Aug 15, 2022 7:52AM ET
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jamie   Saudi competes w/ Russia in the oil market.  Sunni Saudi competes w/ Shia Iran for leadership of Islam world; Iran's nuclear threat is just 1 of many Iranian threats to Saudi.  Russia is a major ally of Iran.  Saudi and its regional allies buy & use Western arms.
James Johannsen
James Johannsen Aug 15, 2022 7:35AM ET
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wait to see where oil goes after mid terms inflation and oil will be breaking records monthly
tim halligan
tim halligan Aug 15, 2022 7:35AM ET
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The administration will give Iran anything it wants. It's not about a nuclear deal it's all about votes and high oil prices doesn't transaction votes.
tim halligan
tim halligan Aug 15, 2022 7:35AM ET
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translate to
jamie
jamie Aug 15, 2022 7:35AM ET
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I think if oil price plunge, it means global recession.
First Last
First Last Aug 15, 2022 7:35AM ET
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jamie   That's stupid.
jemin An
jemin An Aug 15, 2022 6:33AM ET
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Why Pelosi take her own son Paul Pelosi Jr ti asian trip? It's US air force property. Paul Pelosi is not proper person to use that flight.
First Last
First Last Aug 15, 2022 6:33AM ET
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Why was Melania & son living in the White House?  That's taxpayers' property!
Brad Albright
Brad Albright Aug 15, 2022 6:33AM ET
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LOL. You misspelled Jamie.
David Stocks
David Stocks Aug 14, 2022 11:04PM ET
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oil pricing is masterful sidling just a hair under the breakeven for an EV, whilenall of us oil cows happily jump on the oil truck that takes us to the climate slaughterhouse. moooool
 
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