Oil down as Chinese, US economic data fall short of expectations

Sluggish growth of US PMI in July fuels investor concerns of slow pace of demand recovery
( Anadolu Agency) – Oil prices slipped on Tuesday with weak economic data from China and the US, casting doubts over a prompt oil demand recovery and raising oversupply concerns with OPEC+ pumping more oil from August onwards.

International benchmark Brent crude was trading at $72.61 per barrel at 0657 GMT for a 0.38% loss after closing Monday at $72.89 a barrel.

American benchmark West Texas Intermediate (WTI) was trading at $71.03 a barrel at the same time with a 0.32% decrease after ending the previous session at $71.26 per barrel.

Oil prices fell more than 3% during the previous trading session, as industrial data from the two largest oil consumers, China and the US, fell short of expectations.

US manufacturing showed growth in July but at a slower pace than June, with raw material shortages and consumers shifting their spending from products to services.

US Manufacturing Purchasing Manager’s Index (PMI) fell to 59.5 in July, down from 60.6 in June and below the forecast of 60.9.

Manufacturing activity growth in China also fell below expectations in July, with the PMI falling to 50.4 from 50.9 in June, compared to a market forecast of 50.8.

Weakening economic signs in China came with rising cases of the Delta coronavirus variant followed by intensified mitigation measures after the National Health Commission reported 55 locally transmitted cases in 14 provinces on Monday.

Mass virus testing has begun and travel warnings have been issued in many cities. The government announced that a negative test is required for those who travel.

On the supply side, investor concerns are still prevalent with the new output quota decision of OPEC+ oil producers, which started at the beginning of August, to increase overall production by 400,000 barrels per day.

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