×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: COS | EUROPE | EXE | FUTURES | GEN | GOV | INDUSTRIES

Oil Slumps as Delta Variant Takes Toll on China and Equities

Oil Slumps as Delta Variant Takes Toll on China and Equities

Monday, 16 August 2021 03:26 PM

Oil fell for a third consecutive day as Chinese economic data disappointed and the spread of the delta coronavirus variant hurt prospects for global demand.

Futures declined 1.7% on Monday, the biggest loss in a week as fresh outbreaks in Asia weigh on China’s economy, with retail sales and industrial output slowing. U.S. stock markets were also weaker, with energy and travel-related companies slumping on worries that further restrictions could threaten nascent rebounds.

“As data begins to reflect the full impact of the shutdown in China, investors are worried this negative trend we’re seeing won’t just be a localized issue,” says Bart Melek, head of global commodity strategy at TD Securities. “We are moving from expectations of a robust deficit to a potential surplus as the variant continues to halt the growth rate of demand.”

After rallying in the first half of the year, crude prices have stuttered since mid-July. The spread of the delta variant, including in key consumer China, has undermined the outlook for consumption as restrictions on mobility are reintroduced. At the same time, OPEC+ has proceeded with plans to gradually increase production, rolling back the supply curbs it imposed in the early days of the pandemic.

“China is the main driver of the market right now, but we’re also getting into a slack demand period as summer travel trails off,” says John Kilduff, partner at Again Capital LLC. “All of this points the market in one direction.”

China’s oil refining slumped to the lowest level in 14 months as private processors scaled back operations amid a crackdown by authorities. Daily crude processing fell below 14 million barrels a day last month for the first time since May 2020, according to Bloomberg calculations based on government figures released on Monday.

The nation has been dealing with its most widespread Covid outbreak since the initial cases in 2020, with fresh lockdowns imposed. Data on Monday showed China’s economic activity slowed more than expected last month, with retail sales and industrial output missing forecasts, while unemployment rose.

As the market has wobbled in recent weeks, money managers have turned less positive toward U.S. crude futures. Speculators now hold their smallest outright long position in WTI since April 2020.

There are signs U.S. shale producers are ramping up activities. Crude output at major shale basins is set to rise to 8.09 million barrels a day, the highest since April 2020, according to the Energy Information Administration. Production in the Permian Basin is set to reach its highest since March of last year, the agency said.

© Copyright 2021 Bloomberg News. All rights reserved.


StreetTalk
Oil fell for a third consecutive day as Chinese economic data disappointed and the spread of the delta coronavirus variant hurt prospects for global demand.Futures declined 1.7% on Monday, the biggest loss in a week as fresh outbreaks in Asia weigh on China's economy, with...
COS, EUROPE, EXE, FUTURES, GEN, GOV, INDUSTRIES, MARKETS, NORTHAM, NRG, OIL, UK, US, WORLD, WWTOP
425
2021-26-16
Monday, 16 August 2021 03:26 PM
Newsmax Media, Inc.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved