August 16, 2022

Oil drops at start of week as China data raises demand concerns


Oil fell as the week’s trading kicked off, after poor Chinese economic data added to concerns that a global slowdown may sap demand.

West Texas Intermediate dropped toward $98 a barrel after sinking almost 7 per cent in July in the first back-to-back monthly loss since late 2020.

Weekend data indicated a surprise contraction in Chinese factory activity, highlighting the cost of Beijing’s preference for mobility curbs to tackle Covid-19.

In Libya, meanwhile, crude output has rebounded after a series of disruptions that more than halved supply, according to the OPEC member’s oil minister.

Production has returned to 1.2 million barrels a day, a level last seen in early April, Mohamed Oun said in a telephone interview.

Oil has seen volatile trading in recent months as concerns about a slowdown hurt demand for commodities even as underlying signals pointed to still-tight physical conditions.

Data last week showed the US economy shrank for a second quarter, while the Federal Rerserve hiked rates by 75 basis points.

Read: US Federal Reserve hike leads GCC to follow, but rate paths diverge again

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