Oil futures fell Monday, kicking off the week on a negative note after data on China’s economic growth fell short of expectations.
Price action
-
West Texas Intermediate crude for August delivery
CL00,
-1.29% CL.1,
-1.29% CLQ23,
-1.29%
fell $1.04, or 1.4%, to $74.38 a barrel on the New York Mercantile Exchange. -
September Brent crude
BRN00,
-1.24% BRNU23,
-1.24% ,
the global benchmark, dropped $1.15, or 1.4%, to $78.72 a barrel on ICE Futures Europe. -
Back on Nymex, August gasoline
RBQ23,
-0.92%
fell 1.1% to $2.615 a gallon, while September heating oil
HOU23,
-0.89%
shed 1% to $2.572 a gallon. -
September natural gas
NGU23,
+1.03%
was up 1.3% at $2.563 per million British thermal units.
Market drivers
China reported that its economy grew 6.3% year-over-year in the second quarter, missing expectations for 7.1% growth. This prompted Wall Street analysts to mark down forecasts for the world’s second-largest economy early Monday. Disappointment in China’s rebound following the lifting of strict COVID-19 curbs on activity has been cited as a factor keeping crude under pressure in 2023.
Oil prices, however, have risen for three straight weeks. Last week’s gains came as the U.S. dollar extended a slide on expectations the Federal Reserve is nearing the end of its cycle of rate hikes. A weaker dollar can be supportive for commodities priced in the unit, making them less expensive to users of other currencies.
Supply cuts by Saudi Arabia and Russia have also helped buoy crude amid expectations for the global market to move into deficit in the second half.
“While China transport activity and apparent demand are meeting expectations of a rebound, traders could turn increasingly concerned that signs of slowing in the broader economy will begin to impact the demand in Q3 onwards, negatively impacting the bullish thesis,” Stephen Innes, managing director of SPI Asset Management, said in a note.
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