Official data show that economic activity and throughput in China are lagging. Oil prices fell more than 1% on Monday, meaning new strains of COVID-19 colossal impact the world economy.
The price of Brent oil fell by 1.3%, 90 cents per barrel, to $ 69.69. U.S. crude fell 1.4 percent, or 97 cents, to $ 67.47 a barrel.
Retail sales growth in China and factory output slowed significantly in July. Despite optimistic expectations, the onslaught of the global pandemic has dealt a severe blow to business.
Impact of Oil Price Reduction on Processes
According to Kelvin Wong, a market analyst at CMC Markets in Singapore, the decrease in oil futures is due to weaker growth data from China. China is a significant consumer of oil. The growth of the global peak is even more intensified.
China’s crude oil refining has been falling daily since May 2020. Processing plants are reducing production amid tight quotas and increasing stocks.
Japan, The fourth-largest importer of crude oil globally, many analysts expect small economic growth in the current quarter. Due to dealing with record cases of infection, updated emergency restrictions apply, which naturally affects household expenses.
According to Moody, in the face of a pandemic delay, growth will be under pressure as production and costs struggle. Furthermore, according to the International Energy Agency, the change in oil demand growth in July should come due to the rage of a new delta strain developed in the world.
According to the CFTC, the U.S. Commodity Futures Trading Commission, managers have downgraded U.S. crude oil futures and options. In addition, futures and options positions also declined in London and New York.
The global pandemic seems to have turned out to be just a turning point for the oil sector as in other areas. It should be noted that stabilizing the overall picture will give us a clearer picture. A way to correct the pandemic-induced shocks will also appear as soon as possible.