Oil prices fell on Monday after China’s third-quarter economic growth rose came in weaker than expected, underscoring concerns that surging coronavirus cases globally are impacting demand in the world’s largest oil importer.
The world’s second-largest economy expanded by 4.9% in the third quarter from a year earlier, missing analyst expectations of 5.2%, government data showed. Refiners in China, the world’s second-largest oil user, slowed their processing rates in September.
Brent crude for December LCOc1 slipped 20 cents, or 0.5%, to US$42.73 a barrel by 0826 GMT. U.S. West Texas Intermediate crude for November CLc1 was at US$40.69 a barrel, down 19 cents. The contract will expire on Tuesday.
Brent rose 0.2% last week while WTI gained 0.7%, after crude and oil product inventories in the United States, the world’s top oil consumer, fell.
The Chinese data showed growth in goods and services is softening while the data on crude processing was “disappointing”, said Howie Lee, an economist at Oversea-Chinese Banking Corp (OCBC).
“We’re likely going to see prices being soft for the rest of the day,” Lee said.
China’s oil-buying frenzy earlier this year is expected to slow in the fourth quarter amid high inventories and limited import quotas for independent refiners.
Investors are focusing on the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group happening later on Monday, added OCBC’s Lee.
OPEC+ consists of the Organization of the Petroleum Exporting Countries and producer allies such as Russia. The JMMC may decide whether it will delay plans reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd starting in January.
Prices are unlikely to rally on a delay since that has been priced in by the market, Lee said.
Last week’s meeting of the OPEC+ Joint Technical Committee reported a gloomier fuel demand outlook because of fears that a prolonged second wave of the COVID-19 pandemic and a jump in Libyan output could push the oil market into surplus next year.
“There are growing calls for OPEC+ to scrap their current plan of easing output cuts,” ING analysts said in a note.
However, the market may have to wait until the next OPEC+ meeting on Nov. 30 and Dec. 1 for any concrete decision, they said.
Energy firms in the United States, the world’s biggest oil producer, last week added the most oil and natural gas rigs since January as producers return to the well pad with crude prices holding around US$40 a barrel over the past several months. Credit: Reuters