Oil fell on Monday morning in Asia, as concerns about a slowing economic recovery in China, the second-biggest consumer of oil globally, dimmed the fuel demand outlook. Investors are also looking to the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to increase their oil production.
Brent oil futures fell 1.05% to $74.62 by 1:12 AM ET (5:12 AM GMT) and WTI futures were down 0.92% to $73.27.
China’s Caixin Manufacturing PMI, released earlier in the day, was 50.3 lower than expected in July. Manufacturing and non-manufacturing PMIs, released on Saturday, were 50.4 and 53.3.
Raw material costs, equipment maintenance, recent flooding and the latest COVID-19 outbreak have weighed on business in the country, with growth at its slowest in nearly a year and a half.
“China is leading the economic recovery in Asia and if the slump deepens, concerns will grow that the global outlook will drop significantly… the crude demand outlook is volatile and that probably won’t improve until global immunization improves,” OANDA senior analyst Edward Moya told Reuters.
OPEC+ July oil production is reported to have risen to the highest level since April 2020. The group will continue to ease existing production from August 1 onwards, while Saudi Arabia The United States, the largest oil exporter globally, has phased out voluntary supply cuts.
Regarding COVID-19, the number of daily cases globally continues to increase. However, it is hoped that higher vaccination rates may reduce the likelihood of harsh restrictions being imposed, leading to a sharp drop in fuel demand in 2020.
The director of the US National Institute of Allergy and Infectious Diseases, Anthony Fauci said on Sunday the US would not order a lockdown, but “things are going to get worse” as the Delta variant of the virus pushes ahead. increase in daily cases in unvaccinated populations.
In India, the third-largest oil importer globally, daily gasoline consumption in July exceeded pre-COVID-19 levels. States across the country have eased their COVID-19 lockdowns amid low gasoline sales, a sign that industrial activity is dwindling.
Meanwhile, Iran is likely behind Thursday’s attack on an Israeli-managed oil product tanker off the coast of Oman, the United States and Britain said on Sunday. The attack killed one Briton and one Romanian, to which the US and UK said they would work with their partners to respond.
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