Oil dips more than 1% as Chinese GDP dents demand hopes

Russian oil exports from western ports set to fall -sources

By Reuters

Published: Mon 17 Jul 2023, 8:53 PM

Oil dropped by more than 1 per cent 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 per cent year-on-year in the second quarter, compared with analyst forecasts of 7.3 per cent, 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.

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Brent crude fell $1.11 or 1.4 per cent, to $78.78 a barrel by 12 p.m. ET (1600 GMT) and US West Texas Intermediate crude dropped by $1.06, or 1.4 per cent, 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 The alert was subsequently withdrawn because it repeated news published on June 4.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 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.