By Florence Tan
SINGAPORE (Reuters) Oil prices fell for the second time on Monday, as low China economic data caused worries about the demand of the world’s biggest crude importer, and the chief of the world’s biggest exporter Saudi Aramco said that it was in the process of ramping up its production.
Brent crude futures dropped $1.14 (or 1.2 percent up to $97.01 one barrel by 0631 GMT after closing 1.5 percent lower on Friday. U.S. West Texas Intermediate crude traded at $91.03 per barrel with a loss of $1.06 which is 1.2 percent, following a 2.4 percent decrease during the earlier session.
The Chinese economy unexpectedly slows down in July, and refineries’ output fell down to 12.53 million barrels per hour. This is the lowest since March 2020 data from the government revealed.
“The official data suggest that oil demand is decreasing due to the fact that consumers and logistics in the country are slowed by record high prices at the pump,” said Heron Lin the economist of Moody’s Analytics.
The demand for oil could remain at a low throughout the year because COVID-19’s potential for restrictions will encourage savings for precautionary purposes and decrease consumption of oil, he stated.
Saudi Aramco is ready to boost crude oil production at its highest capacity, 12 million barrels per day should it be requested to do this by government officials from the Saudi Arabian government, Chief Executive Amin Nasser said to journalists on Sunday.
“We believe in our capacity to increase production to around 12 million barrels per day at any time there’s a need or request either from government officials or Energy Ministry to boost the production of our company,” Nasser said. He also said that China’s ease of COVID-19 restrictions and an increase in demand in the aviation sector could boost the demand.
Prices for oil rebounded by more than 3% over the past week following the damage to a pipeline component that was a source of oil disrupted production on various offshore Gulf of Mexico platforms and investors cut back their expectations of rate hikes across the United States.
Producers were able to restart certain of the plants that were shut down when repairs had been completed on Friday a Louisiana official told the newspaper.
Energy services company Baker Hughes Co reported on Friday that the U.S. oil rig count increased by 3 to 601 over the last week. The rig count is an early indicator of output has been slow to increase, with the production of oil only expected to rebound from the pandemic-related reductions in the coming year.
Global oil markets were supported by tight supply as we near EU sanctions against Russian crude oil as well as refined products this winter.
The supply could increase More supplies could be on the way if Iran, as well as the United States, accept an offer by the European Union to revive the 2015 nuclear agreement, which will allow sanctions to be lifted on Iranian exports of oil, analysts have said.
(Reporting by Florence Tan; Editing by Kenneth Maxwell and Muralikumar Anantharaman)