Sign up for myFT Daily Digest and be the first to learn about oil news.
Oil prices were hit by selling pressure again on Monday, falling below $70 a barrel, and the sharp drop last week was exacerbated by growing concerns about the delta coronavirus variants weakening demand in Asia.
The price of Brent crude in the international crude oil market fell 4% to US$67.87 per barrel, extending the 7% decline last week. The US oil benchmark West Texas Intermediate also fell more than 4% to US$65.33 per barrel. It fell more than 7% last week, the biggest drop in nine months.
China is the world’s largest oil importer and is The worst Covid outbreak Since the beginning of the pandemic, travel restrictions have been tightened and large-scale tests have begun to try to control the virus.
Stephen Brennock, an analyst at the oil brokerage company PVM, said: “This series of stringent epidemic control has weakened the country’s fuel demand outlook.” “More importantly, except in the shadow of the new crown epidemic. , China’s oil consumption is still under pressure from signs of economic cooling.”
According to the data of the Netherlands International Group, the data released last weekend showed that China’s oil imports in July were still sluggish, at 9.7 million barrels per day, which was lower than June’s 9.8 trillion per day and much lower than the 12.1 trillion per day in the same period last year. day. In 2022, crude oil imports fell 5.6% year-on-year.
Wenyu Yao, senior commodity strategist at ING, said that high oil prices, limited import quotas (especially import quotas for private refineries) and refinery maintenance have also affected China’s crude oil demand.
“Typhoon In-Fa at the end of July caused the east coast port operations to be interrupted, which also seemed to put pressure on crude oil imports that month,” she said.
The strengthening of the U.S. dollar makes crude oil prices higher for holders of other currencies, which has also hit the oil market. The stronger-than-expected U.S. employment data triggered a rebound in the dollar on Friday as traders reassessed expectations for the country’s central bank to reduce economic support ahead of schedule.
Despite the recent correction, many analysts said that the Delta variable’s risk to oil demand has been exaggerated and the oil market fundamentals look strong.
“Economic growth is still on track, and forecasts still predict strong demand growth for the rest of this year. The cautious OPEC still dominates the supply side of the oil equation,” said Brunnock, referring to the Saudi Arabian leadership. The cartel of the major oil producing country.
An organization called OPEC+, including Russia and other allies, has agreed to increase its monthly supply of 400,000 barrels per day from August until it reverses all production cuts during the pandemic.
After the release of stronger-than-expected US employment data on Friday, gold prices fell 4% during the Asian session on Monday. Due to rising bond yields and the strengthening of the U.S. dollar, the price of precious metals has fallen by 8% this year, which has weakened the attractiveness of holding gold, which has traditionally been regarded as a safe-haven metal.
The price of gold finally fell 1.3% to US$1,739 per troy ounce. Earlier, it briefly touched the lowest level of US$1,684 since March.
Newsletter twice a week
Energy is an indispensable business in the world, and energy is its newsletter. Every Tuesday and Thursday, Energy Source will be sent directly to your inbox, bringing you important news, forward-looking analysis and insider intelligence. Register here.