Oil prices have dipped in today’s trading after sluggish growth figures from China renewed concerns about demand in the second half of the year.
Brent Crude has dropped 1.13 per cent to $78.97 per barrel in this morning’s session, while WTI Crude has similarly fallen – slipping 1.14 per cent to $74.56 per barrel.
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China’s post-pandemic recovery is seemingly faltering this year following the lifting of pandemic restrictions, with the world’s second largest oil consumer reporting weakening demand for oil.
The country’s gross domestic product increased just 0.8 per cent from April to June this year compared to the previous quarter, according to the latest data from China’s National Bureau of Statistics (NBS).
Chinese refineries processed only 1.6 per cent more crude per day in June than May – which was largely due to reduced processing last month amid spring maintenance.
The softening prices follow a third straight week of gains across both major benchmarks, with oil climbing above $80 per barrel and reaching a three month high in prices.
Prices are being propped up by encouraging economic data in the US – with inflation down to three per cent and expectations the US Federal Reserve will only hike interest rates one more time, suggesting rebounding demand for oil in the world’s largest economy.
Another factor challenging the latest upsurge in prices is the return of production in mass producer and OPEC member Libya.
Output was shut at three major oilfields in Libya last week, however two of them – the Sharara and El Feel- are now back online with a total production capacity of 370,000 barrels per day (bpd).
The 108 field remained shut, with output halted in protest against the abduction of a former finance minister, according to news agency Reuters.
OPEC and the International Energy Agency still anticipate an upsurge in prices over the second half of the year, with demand expected to be rebound in line with tightening markets.
The world’s most influential oil cartel has unveiled up to five million barrels per day of cuts, nearly five per cent of supplies, with Russian exports predicted to fall by as much as 200,000 barrels per day this month after it joined Saudi Arabia in making fresh pledges to cut output.
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