Oil settles lower on weak Chinese economic data

FILE PHOTO – A pump crane surrounded by steam is seen during sunset at PetroChina’s oil field in Karamay, Xinjiang Uyghur Autonomous Region, January 5, 2011. REUTERS/Stringer

(Reuters) – Oil prices settled lower on Monday after disappointing Chinese economic data revived fears of a global recession expected to slash fuel demand.

Brent crude futures closed $3.05, or 3.1%, at $95.10 a barrel after falling 1.5% on Friday.

US West Texas Intermediate crude closed $2.68, or 2.9%, at $89.41 after falling 2.4% in the previous session.

Brent crude futures approached their lowest levels since before Russia sent troops to Ukraine on February 24, while West Texas Intermediate crude futures touched their lowest levels on Monday since early February.

The central bank of China, the world’s largest importer of crude oil, cut lending rates to revive demand as data showed the economy slowed unexpectedly in July, with factory and retail activity slashing due to Beijing’s COVID-free policy and real estate crisis. Read more

Government data showed that refinery production in the country fell to 12.53 million barrels per day, the lowest level since March 2020. Read more

ING Bank cut its forecast for China’s GDP growth in 2022 to 4%, down from the previous forecast of 4.4%, and said a further reduction was possible.

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

“Open interest is still declining, with some (market players) not interested in touching it due to volatility. This is, in my view, the reason for the low volume,” said Giovanni Stonovo, oil analyst at UBS. Weak Chinese data was the catalyst for the decline on Monday.

us dollar index,

Oil is generally priced in US dollars, so a strong dollar makes the commodity more expensive for holders of other currencies.

Talks to revive the 2015 Iran nuclear deal were also in focus on Monday. Analysts said oil supplies could rise if Iran and the United States accepted an offer from the European Union to lift sanctions on Iranian oil exports. Read more

Its foreign minister said that Iran will respond by midnight on Monday to the European Union’s “final” draft text to save the 2015 nuclear deal, calling on the United States to show flexibility to resolve three remaining issues. Read more

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

“It appears that the supply disruptions at several offshore oil platforms within the Gulf Coast region that added to the strength of prices in the past week have now stabilized as production resumes,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Additional reporting by Laura Sanicola and Rowena Edwards Additional reporting by Florence Tan in Singapore Editing by David Goodman, Kirsten Donovan, Barbara Lewis and Deepa Babington

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