Oil tumbles after weak factory data sparks demand concerns

LONDON, Aug 1 (Reuters) – Oil costs dropped sharply on Monday as weak manufacturing information from China and Europe weighed on the demand outlook whereas traders braced for this week’s assembly of officers from OPEC and different high crude producers on provide.

Brent crude futures had been down $3.77, or 3.6%, at $100.20 a barrel by 1319 GMT, having fallen to a session low of $99.75.

U.S. West Texas Intermediate crude was down $4.59, or 4.7%, at $94.03, after hitting a low of $93.49.

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A break for Brent costs beneath the assist degree of $102.68 might set off a drop into a variety of $99.52 to $101.26, Reuters technical analyst Wang Tao mentioned.

Factories throughout Asia and Europe struggled in July as flagging international demand and China’s strict COVID-19 restrictions slowed manufacturing, surveys confirmed on Monday, including to considerations about economies sliding into recession. learn extra

S&P International’s ultimate manufacturing Buying Managers’ Index (PMI) for the euro zone fell to 49.8 in July from June’s 52.1, falling beneath the 50 mark separating progress from contraction for the primary time since June 2020.

The Caixin/Markit PMI eased to 50.4 in July from 51.7 the earlier month, nicely beneath analyst expectations, information confirmed on Monday. learn extra

“[China] was already going through an uphill problem, to place it mildly, as regards to its progress goal this yr and the truth that manufacturing exercise is slowing once more would not bode nicely,” mentioned Oanda analyst Craig Erlam.

Brent and WTI each ended July with a second straight month-to-month loss for the primary time since 2020 as hovering inflation and better rates of interest elevate fears of a recession that may erode gasoline demand.

Analysts in a Reuters ballot for the primary time since April lowered their forecast for 2022 common Brent costs to $105.75 a barrel. Their estimate for WTI fell to $101.28. learn extra

The Group of the Petroleum Exporting International locations (OPEC)and allies together with Russia, collectively often called OPEC+, meet on Wednesday to determine on September output.

Two of eight OPEC+ sources in a Reuters survey mentioned {that a} modest enhance for September can be mentioned on the Aug. 3 assembly. The remainder mentioned output is more likely to be held regular. learn extra

U.S. President Joe Biden visited Saudi Arabia final month.

“Whereas President Biden’s go to to Saudi Arabia produced no rapid oil deliverables, we consider that the dominion will reciprocate by persevering with to steadily enhance output,” RBC Capital analyst Helima Croft mentioned in a word.

Whereas OPEC+ aimed to have totally unwound its file output cuts by this month, information confirmed the group as of June was nonetheless virtually 3 million bpd in need of its output goal as some producing nations wrestle to carry wells again on line. learn extra

The group’s new secretary common, Haitham al-Ghais, reiterated on Sunday that Russia’s membership in OPEC+ was important for the success of the output pact, Kuwait’s Alrai newspaper reported. learn extra

Additionally weighing on costs was an increase in Libyan oil manufacturing, which hit 1.2 million barrels per day (bpd), up from 800,000 bpd on 22 July, after the lifting of a blockade on a number of oil amenities.

U.S. oil manufacturing additionally continued to climb. The nation’s rig rely rose by 11 in July, rising for a file twenty third month in a row, information from Baker Hughes confirmed.