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Oil prices fall on weak Chinese economic data

Mohamed Rehan
16 August 2022, MVT 06:17
(FILES) In this file photo taken on October 21, 2019 a pumpjack from California-based energy company Signal Hill Petroleum is seen in front of the landmark Curley's Cafe, one of two pumpjacks in the Diner's parking lot which has been churning out oil from the ground below since 1921 in Signal Hill, California. - Global oil demand will fall by a record amount this year as lockdown measures imposed to curb the coronavirus outbreak bring the economy to a virtual halt, the International Energy Agency (IEA) said on April 15, 2020. (Photo by Frederic J. BROWN / AFP)
Mohamed Rehan
16 August 2022, MVT 06:17

Oil prices have fallen once again, reported Monday, August 15, after Chinese economic data renewed concerns of a global recession.

Brent crude futures settled down USD3.05, a 3.1 percent dip. It traded at USD95.10 per barrel after dropping 1.5 percent on Friday, August 12.

U.S West Texas Intermediate (WTI) crude showed a 2.9 percent dropping, which a plunge of USD2.68 and trading at USD89.41 a barrel after dropping 2.4 percent during previous session.

Moreover, with the most recent drop Brent futures had reached close to the levels it traded before Russia attacked Ukraine. WTI futures hit its lowest on Monday since February 2022.

This heavy plummet is owed to China's central bank cutting lending rates to revive demand. China is the world's largest crude oil importer.

China's refinery output dipped to 12.53 million barrels per day, its lowest since March 2020.

Meanwhile, China's Gross Domestic Product (GDP) growth is expected to hit 4 percent, which is down from its previous 4.4 percent projection. The country's GDP is expected to drop further.

On the other hand Brent crude open interest is down 20 percent from August 2021.

"Open interest is still falling, with some (market players) not interested in touching it because of its volatility. That is, in my view, the reason resulting in higher volumes to the downside," UBS oil analyst Giovanni Staunovo said.

Additionally a damaged oil pipeline that disrupted output of several offshore U.S. platforms in Gulf of Mexico was repaired late Friday, August 12, resuscitating oil producers to reactivate parts of their halted production.

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