Oil prices slide on worries about Chinese economy and rising crude production

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Oil prices fell by more than a dollar on Monday amid concerns over the Chinese economy after a survey showed factory activity growth fell sharply among the world’s second-largest consumer of oil, concerns being compounded by an increase in oil production from OPEC producers.

Brent crude oil futures slipped $ 1.12, or 1.5%, to $ 74.29 a barrel at 0626 IST, while US West Texas Intermediate (WTI) crude futures fell 97 cents, or 1.3%, to $ 72.98 a barrel after slipping to a session low of $ 72.87. .

“China is leading the economic recovery in Asia and if the decline deepens concerns are growing that the global outlook will drop significantly,” said Edward Moya, senior analyst at OANDA.

“The outlook for gross demand is on volatile ground and it is unlikely to improve until global vaccinations improve.”

Chinese factory activity growth fell sharply in July, as demand contracted for the first time in more than a year, in part due to high product prices, a business survey found on Monday. , highlighting the challenges facing the global manufacturing hub.

Read also | Fuel demand rises to pre-Covid level in July

The weaker results of the private survey, mainly covering export-oriented manufacturers and small manufacturers, are broadly in line with those of an official survey released on Saturday which showed activity was growing at the slowest pace in 17 month.

Also weighing on prices, a Reuters survey found that the Organization of the Petroleum Exporting Countries (OPEC) oil production rose in July to its highest level since April 2020, as the group eased further production restrictions as part of a pact with its allies while Saudi Arabia’s largest exporter Arabia has ended a voluntary reduction in supply.

As coronavirus cases continue to rise around the world, analysts have said higher vaccination rates will limit the need for the severe shutdowns that ravaged demand during the peak of the pandemic last year.

The United States will not lock in again to curb Covid-19 but “things will get worse” as the Delta variant fuels an increase in cases, mostly among the unvaccinated, America’s top infectious disease expert said on Sunday. Dr Anthony Fauci.

India’s daily gasoline consumption topped pre-pandemic levels last month as states ease Covid-19 lockdowns while diesel sales were weak, signaling moderate industrial activity in July.

The United States and Britain said on Sunday they believed Iran carried out an attack on an Israeli-run tanker off the coast of Oman on Thursday, killing a Briton and a Romanian, and pledged to work with partners to respond to them.

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