Singapore, Oct 31 (BNA): Oil prices fell on Monday after weaker-than-expected factory activity data from China and on concerns that wider COVID-19 restrictions will dent demand.
Brent crude futures were down 63 cents, or 0.7 percent, at $95.14 a barrel by 04:20 GMT, after falling 1.2 percent on Friday.
US West Texas Intermediate crude was at $87.43 a barrel, down 47 cents, or 0.5%, after settling at 1.3% on Friday.
said Stephen Innes, managing partner, according to Reuters.
“As long as COVID-0 remains entrenched, it will continue to frustrate the oil bulls.”
An official survey showed on Monday that factory activity in China, the world’s largest importer of crude, unexpectedly fell in October, affected by slumping global demand and severe restrictions on the emerging coronavirus (Covid-19) that affected production.
Chinese cities are doubling down on Beijing’s COVID-free policy as the outbreak widens, dampening earlier hopes of a demand rebound.
Strict COVID-19 restrictions in China have dampened economic and trade activity, slashing demand for oil. China’s imports of crude oil in the first three quarters of the year fell 4.3% from the same period a year earlier – the first annual decline for this period since at least 2014 – as Beijing’s severe restrictions on COVID-19 hit fuel consumption hard.
Other risks to oil demand are coming from Europe, as the continent is likely to enter a recession this winter, said CMC Markets analyst Leon Lee.
The eurozone is likely to enter a recession as its business activity shrank in October as fast as it has been in nearly two years, according to a Standard & Poor’s Global survey, as rising costs of living keep consumers wary and dampen demand.
European Central Bank policymakers are behind plans to keep raising interest rates, even if that pushes the bloc into recession and sparks political discontent.
Meanwhile, some of the largest US oil producers indicated on Friday that productivity and volume gains in the Permian Basin – the country’s largest shale field – are slowing.
The warnings came as US oil exports surged to a record high last week, partly pushing up WTI prices 3.4%. Brent rose 2.4% last week, posting its second consecutive weekly gain.
Two OPEC sources said that in forecasts to be released on Monday, the Organization of the Petroleum Exporting Countries (OPEC) is expected to stick to the view of rising oil demand for another decade, despite the increased use of renewable energy and electric vehicles.
HF