LONDON (Reuters) – Oil prices experienced a decline of over 1 percent on Monday following lower-than-anticipated economic growth in China, which raised concerns about demand in the world’s second-largest oil consumer. Concurrently, the partial restart of suspended Libyan output also exerted downward pressure on prices.
China’s gross domestic product (GDP) expanded by 6.3 percent year-on-year in the second quarter, falling short of analysts’ projections of 7.3 percent. The country’s post-pandemic recovery is rapidly faltering due to weakening demand domestically and internationally.
Warren Patterson, Head of Commodities Research at ING, commented on the disappointing GDP figures, stating, “The GDP figures did not meet expectations, providing little relief for concerns regarding the Chinese economy.”
Brent crude declined by $1.32, or 1.7 percent, to reach $78.55 per barrel by 0842 GMT, while US West Texas Intermediate (WTI) crude dropped by $1.22, or 1.6 percent, to $74.20. This marked the second consecutive day of losses for both contracts.
John Evans, an oil broker at PVM, expressed his view on the situation, saying, “China’s data was eagerly anticipated, at least by the bulls. However, the current economic backdrop for Asia’s driving force now seems to favor the bears.”
Both oil benchmarks had recorded three weeks of gains and reached their highest levels since April last week, benefiting from output cuts implemented by OPEC+ and unplanned disruptions in Libya and Nigeria.
On Monday, oil prices were also affected by the resumption of production at two out of the three Libyan fields that were shut down last week due to protests over the abduction of a former finance minister.
In a further indication of tightening supplies, two sources reported that Russian oil exports from western ports are expected to decline by 100,000-200,000 barrels per day next month. This signifies Russia’s commitment to reducing supply in line with Saudi Arabia, as pledged – (Chinese GDP).
Follow our Google News channel online or through the app for all the latest news.