Oil dropped by more than 1% on Monday after weaker-than-expected Chinese economic growth raised doubts over the strength of demand in the world’s second-biggest oil consumer, and a partial restart of halted Libyan output also pressured prices.
China’s gross domestic product (GDP) grew 6.3% year-on-year in the second quarter, compared with analyst forecasts of 7.3%, as its post-pandemic recovery lost momentum.
"The GDP came in below expectations, so will do little to ease concerns over the Chinese economy,” said Warren Patterson, ING’s head of commodities research.
Brent crude fell $1.11 or 1.4%, to $78.78 a barrel by 12 p.m. ET (1600 GMT) and U.S. West Texas Intermediate crude dropped by $1.06, or 1.4%, to $74.35 on a second straight day of losses for both contracts.
Hedge fund buying has slowed as a result of ideas that demand could have been overstated after the weak numbers from China, said Dennis Kissler, senior vice president of trading at BOK Financial.
Oil briefly rose after a Reuters news alert on Saudi Arabia extending a voluntary output cut. The alert was subsequently withdrawn because it repeated news published on June 4.
Oil also came under pressure on Monday from the resumption of output at two of three Libyan fields that shut last week. Output had been halted by a protest against the abduction of a former finance minister.
In another sign of tighter supplies, Russian oil exports from western ports are set to fall by 100,000-200,000 barrels per day (bpd) next month, a sign that Moscow is making good on a pledge for supply cuts in tandem with Saudi Arabia, two sources said on Friday.
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