Crude Oil Lower on Slowing Global Growth Concerns

Crude Oil Lower on Slowing Global Growth Concerns
Credit: © Reuters.

By Peter Nurse -- Crude oil prices weakened Tuesday, continuing the sharp losses of the previous session on concerns slowing global growth will hit demand in the second half of this year.

By 9:35 AM ET (1335 GMT), U.S. crude futures were down 0.4% at $66.78 a barrel, while Brent futures were down 0.2% at $69.38 a barrel. Both contracts fell over 1.5% on Monday.

U.S. Gasoline RBOB Futures rose 0.5% to $2.2107 a gallon.

Hitting sentiment Tuesday was the news that U.S. retail sales fell more than expected in July, dropping 1.1% last month, compared with the forecast of a 0.3% drop. 

This follows on from Monday’s economic data showing Chinese industrial production and retail sales growth slowed sharply in July. 

Adding to the negative news has been the spread of the Covid-19 delta variant, particularly in China, the second largest oil consumer in the world, undermining the outlook for demand as mobility restrictions are reintroduced. 

The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, has also proceeded with plans to gradually increase production, rolling back the supply curbs it imposed in the early days of the pandemic.

In addition, there are growing signs that U.S. shale producers are ramping up activities. The latest data from Baker Hughes showed the U.S. rig count increased by 10 over the last week to 397,  the largest weekly increase in rig activity since April. Also, the Energy Information Administration pointed to an increase in crude output at major shale basins to 8.09 million barrels a day, the highest since April 2020.

Attention will thus turn to the release of the latest U.S, crude inventories levels later Tuesday, from the industry body American Petroleum Institute , with last week seeing a draw of just over 800,000 barrels of oil. 

In corporate news, BHP Group (NYSE: BHP ) announced it will merge its oil and gas operations with Woodside (OTC: WOPEY ) Petroleum as the world’s top miner continues its shift away from fossil fuels.


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