Oil was under pressure on Monday due to expectations of a slowdown in the economy in China and a significant increase in oil supplies to the world market.
October futures for Brent on the London ICE Futures exchange fell in price by 5.10%, to $93.14 per barrel. WTI futures for September in electronic trading on the New York Mercantile Exchange by this time fell by 4.93%, to $ 87.55 per barrel. A few hours later, the quotes tried to recover, rising to $88.61. By the way, according to last week's results, Brent fell by $1.45, and WTI - by $2.25.
Retail sales and industrial production growth in China showed very weak results in July, which undermined investors' confidence. Retail sales were expected to increase by 5%, but actually grew by only 2.7% in annual terms. The pace of industrial production growth last month also slowed down to 3.8% (in June this indicator was at the level of 3.9%). Analysts had expected a rise in industrial production to 4.6%.
ING Bank lowered its forecast for China's GDP growth in 2022 to 4%, earlier the forecast for Chinese economic growth was at 4.4%. Bank analysts warn that a further downgrade of the forecast is quite possible and will depend on the strength of exports, which are limited today by very high inflation, anti-coronavirus measures, as well as rising unemployment in China.
Last week, OPEC announced a new forecast for oil demand growth this year, which turned out to be lower than previous expectations. So, from now on, the cartel predicts demand at the level of 3.1 million barrels per day (that is, 0.3 million less than the previous forecast). As for the growth forecast for next year, it remains at the level of 2.7 million barrels per day. According to OPEC, oil consumption this year will be 100.03 million barrels per day, previously expected 100.3 million barrels.
The number of active drilling rigs in the US has increased by 3 units, according to oilfield services company Baker Hughes.
Oil supplies to the world market could rise if Iran and the US accept the EU's proposal to restart the 2015 nuclear deal, which would lift sanctions on Iranian oil exports. Iranian Foreign Minister Hossein Amirabdollahian said that the country will respond to the EU text at a later date and that a deal can be struck, but for that the US must agree to the three remaining provisions.
It also became known that the head of the Saudi state oil and gas company Saudi Aramco, Amin Nasser, is ready to increase oil production to the maximum possible level - 12 million barrels per day. True, the final decision will be made by the government of the kingdom, but it has not yet announced it.
At the same time, the automobile season in the world is gradually coming to an end. In the absence of triggers for strong growth, oil quotes are limited this week to the range of $95-$100 per barrel.