Oil slumps as weak factory data fuels global demand concerns
Oil prices tumbled on Tuesday with a bleak outlook for fuel demand as data pointed to a global production decline. As a significant factor, eyes are on the major crude producers who will meet this week to determine whether to increase supply.
Brent crude futures fell 24 cents, or 0.2%, to $99.82 as of 0634 GMT, while WTI crude futures fell 10 cents, or 0.1%, to $93.78 a barrel.
The drop came after Brent futures dropped to $99.09 a barrel on Monday, the lowest session since July 15. The WTI crude oil gauge fell as low as $92.42 a barrel and hit its weakest level since July 14.
Crude oil prices fell after factory activity data signaled the world was heading towards a massive global economic contraction and expectations for more oil production after a very good earnings season for oil companies.
Recession concerns rose on Monday as surveys from the US, Europe, and Asia showed factories struggled to gain momentum in July. Global demand concerns and China's strict COVID-19 restrictions have slowed production.
The price drops are also relevant to the outcome of Wednesday's meeting between the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, to decide on September production.
Two of the eight OPEC+ sources say that a modest increase for September will be discussed at the August 3 meeting, while the rest argue that output will be kept flat. It is thought that Saudi Arabia will force OPEC+ to increase oil production at the meeting.
The upward momentum of oil prices is waning. Oil is likely to lead to the decline among commodities in case the supply and demand situation shows signs of further deterioration.
The US is targeting Chinese and UAE companies in new oil sanctions on Iran. The United States on Monday imposed sanctions on Chinese and other firms it said helped sell tens of millions of dollars of Iranian oil and petrochemical products to East Asia as it sought to increase pressure for Iran to halt its nuclear program.
Also, the possibility of US House of Representatives Speaker Nancy Pelosi visiting Taiwan despite Beijing's warnings casts a shadow on the market.
The point is that for the first time in more than 25 years a high-profile US official will visit the island, which could escalate tensions between the US and China.
Related Articles
Oil prices are rising as supply concerns increase amid expectations of a prolonged conflict in the Middle East
Oil prices continued to rise following US and Iranian attacks on ships serving their respective purposes
Oil prices closed higher this week following renewed US-Iran hostilities
