Oil prices fall on China Covid-19 curbs and weak factory activity data
By Noah Browning
LONDON (Reuters) – Oil prices fell on Monday after weaker-than-expected factory activity data in China and fears that the country’s widening COVID-19 restrictions could reduce demand.
Brent crude futures fell 69 cents, or 0.7%, to $95.08 a barrel at 12:40 GMT, extending Friday’s 1.2% decline.
U.S. West Texas Intermediate (WTI) crude fell 84 cents, or 0.9%, to $87.06 after falling 1.3% on Friday.
Both benchmarks, however, are on track for their first monthly gains since May.
Factory activity in China, the world’s biggest importer of rough, unexpectedly fell in October, an official survey showed on Monday, weighed down by slowing global demand and tight COVID-19 restrictions that have hit production.
“The contraction in Purchasing Managers Index (PMI) data adds to the post-China Congress party blues for oil markets. It’s not hard to draw a straight line between the weaker PMIs and the China’s COVID-zero policy,” said Stephen Innes, managing partner. of SPI Asset Management.
“As long as COVID-zero remains entrenched, it will continue to thwart the oil bulls.”
Chinese cities are stepping up zero-COVID curbs as outbreaks widen, dampening hopes of a rebound in demand.
Strict COVID-19 restrictions in China have hit economic and business activity, reducing demand for oil. China’s crude oil imports for the first three quarters of the year fell 4.3% year-on-year for the first annual decline for the period since at least 2014.
Meanwhile, the eurozone is likely to slip into recession, with its October business activity contracting the fastest in nearly two years, according to an S&P Global survey, as the rising cost of living prompts consumers to caution and harms demand.
European Central Bank policymakers are also backing plans to keep raising interest rates, even if it pushes the bloc into recession and stokes political resentment.
The Organization of the Petroleum Exporting Countries (OPEC) on Monday raised its medium- and long-term oil demand forecast and said $12.1 trillion in investment is needed to meet that demand despite the energy transition.
(Reporting by Noah BrowningAdditional reporting by Florence Tan and Emily ChowEditing by David Goodman)
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