The rapid spread of the delta variant of the coronavirus in many parts of the world has stimulated new restrictions on mobility and reduced energy consumption, including in China.
Oil prices fell for the fourth consecutive day, the longest decline since March, pressured by the rise in the U.S. dollar and economic data indicating that the road to recovery in the United States is uneven.
Futures fell 1% on Tuesday. The dollar’s rise has weakened the attractiveness of commodities priced in that currency. US retail sales fell more than expected in July, while factory production increased the most in four months. Data from China on Monday showed that the economy slowed last month.
Phil Flynn, a senior market analyst at Price Futures Group, said: “The poor data from China is a zero basis for rekindling global concerns about Covid-19.” “Although the US’s indicators show that the situation is better than China’s, it is the second largest economy. , What happened in this area has a huge impact on the market.”
After a strong rebound in the first half of the year, crude oil’s gains have been suppressed in recent weeks. The delta variant has stimulated new restrictions on liquidity in many countries, including China, and has harmed energy consumption. In this context, JPMorgan Chase has been one of the banks that lowered oil price forecasts.
“China is the engine of global participatory demand growth,” said Thomas Fenlon, director of Energy Analysis Group Co., Ltd. “When demand shows signs of declining, you can be sure that the impact will spread.”
- WTI for September delivery fell 70 cents to close at $66.59 per barrel
- October Brent crude oil fell 48 cents to close at US$69.03 per barrel
Despite the demand being challenged, OPEC and its allies, including Russia, have insisted on easing production cuts implemented in the early stages of the pandemic. This month’s supply will increase by 400,000 barrels per day.
Although US President Joe Biden called on OPEC to restore more production to reduce gasoline prices last week, as prices weakened, OPEC+ representatives said that they did not see the need to accelerate the recovery of production. The next regular meeting of the group is scheduled for September 1.
- Libya’s energy minister stated that unless lawmakers overcome the protracted dispute and pass OPEC’s first national budget in about seven years, it will be difficult for Libya to maintain its oil production levels.
- The Biden administration is appealing the judge’s decision to suspend the sale of drilling rights.
- The management of the troubled Chinese private refinery Liaoning Baolai Enterprise Group has been taken over by government officials.
- The Fed said that after a 0.2% increase in June, industrial production increased by 0.9% month-on-month in July