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Wednesday, July 6, 2022

Oil Falls 3% on Weak China and Global Data

Oil Falls 3% on Weak China and Global Data© Reuters.

Investing.com – The U.S.-Sino trade deal cannot happen quick enough for oil bulls.

U.S. West Texas Intermediate crude and London’s Brent fell about 3% by midday Tuesday as oil traders and investors digested news of China’s lowest annual economic growth in nearly 30 years and factory orders indicating a further loss in activity and jobs.

The International Monetary Fund, meanwhile, revised downward its 2019 global growth forecast to 3.5% from October’s 3.7%.

lost $1.48, or 2.7%, at $52.56 per barrel by 12:09 PM ET (17:09 GMT), after rising 3.3% on Friday.

, the global oil benchmark, slipped by $1.75, or 2.8%, to $60.99, after gaining 2.5% in the previous session.

Friday’s rally came as OPEC published the reduction of each oil producing country under an alliance that committed to taking a combined 1.2 million barrels per day off the market until prices, which fell 40% during a three-month rout last year, were restored to satisfactory levels.

Speculation that China, the world’s largest oil buyer, had offered to raise its annual imports from the U.S. by more than $1 trillion to offset their trade imbalance also boosted the market, although Washington was reportedly cool to the idea as Beijing planned to make the upgrade over a six-year period rather quicker as favored by the Trump administration.

President Donald Trump’s no-show at the World Economic Forum in Davos, Switzerland, due to the partial U.S. government shutdown, also out snuffed hopes that the trade talks would make some advanced progress this week. Trump and high-ranking U.S. officials had been expected to meet the Chinese delegation to the forum ahead of the 90-day trade truce ending March 1.

China’s oil imports hit a record above 10 million bpd in late 2018. But there is also a growing consensus that its energy growth may have peaked for now.

“Of course, looking at Chinese oil demand one would not see any real evidence of a slowdown,” said Phil Flynn, analyst at The Price Futures Group brokerage in Chicago.

“OPEC, led by Saudi Arabia, has also vowed to do whatever it takes to support prices. Yet the question is can they do enough if the global economy slows more swiftly or gets hit with black swans or grey rhinos?”

Aside from Trump, also likely to give Davos a miss will be Saudi Energy Minister Khalid Al-Falih, who joins a number of world leaders who will absent from the powerful annual gathering of global business and political leaders, Bloomberg reported. Al-Falih had been expected to discuss production cuts and other strategies supportive to oil prices with Russian Energy Minister Alexander Novak at the forum.

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Source: Investing.com

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