Oil prices stabilize amid fears of slowing Chinese demand

Stacks of a Total Grande Potts oil refinery seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Register now to get free unlimited access to Reuters.com

  • China’s Q1 GDP tops expectations, but weakness in March raises forecast risks
  • Libya halts operations at El Feel oil field due to protests
  • US oil drilling, production rises as energy prices rise

TOKYO (Reuters) – Oil prices stabilized on Monday as concerns about slowing demand in China prompted investors to take profits from gains made earlier in the day on concerns about tight supply and a worsening crisis in Ukraine.

At 0642 GMT, Brent crude futures were up 27 cents, or 0.2%, at $111.97 a barrel, retreating from their highest since March 30 at $113.80 hit earlier in the session.

US West Texas Intermediate futures rose 20 cents, or 0.2%, to $107.15 a barrel, after rising to $108.55, the highest since March 30.

Register now to get free unlimited access to Reuters.com

China’s economy slowed in March as consumption, real estate and exports took a hit, sparking faster-than-expected first-quarter growth numbers and exacerbating expectations already weakened by COVID-19 restrictions and the Ukraine war. Read more

The country refined 2% less oil in March than a year earlier, with productivity falling to its lowest level since October, as higher crude prices squeezed profit margins and a tight shutdown hurting fuel consumption. Read more

“Some Asian investors took profits because they became concerned about slowing demand in China,” said Satoru Yoshida, commodity analyst at Rakuten Securities.

See also  How does China contribute to rising inflation around the world in three areas

Last Thursday, the day before the Easter holiday, Brent and West Texas Intermediate climbed more than 2.5% amid news that the European Union may impose a ban on Russian oil imports.

EU governments said last week that the bloc’s executive body was working on proposals to ban Russian crude, but diplomats said Germany was not actively supporting an immediate ban. Read more

The comments came before rising tensions in the Ukraine crisis, with authorities reporting several explosions in western and southern Ukraine on Monday, as Russian forces declared almost complete control of the strategic southern port city of Mariupol after nearly two months of bloody fighting. Read more

“The continuation of the war between Russia and Ukraine with no signs of a ceasefire has fueled supply concerns, especially as demand is expected to pick up as the northern hemisphere driving season approaches,” said Chiyuki Chen, senior analyst at Sunward Trading.

The International Energy Agency has warned that about three million barrels per day of Russian oil could be shut down from May onwards due to sanctions, or buyers voluntarily avoid Russian shipments. Read more

On Friday, the Russian Interfax news agency reported that Russian oil production continued to decline in April, down 7.5% in the first half of the month from March.

Adding to the pressure, Libya halted oil production from the El Feel oil field on Sunday and two sources at the Zueitina oil port said exports were halted after protesters seized these sites, calling on Prime Minister Abdel Hamid al-Dabaiba to resign. Read more

See also  S&P 500 pulls back into bear market territory; Continued selling of the stock market

However, the outlook for US oil production is being revised upward despite labor and supply chain constraints, as higher prices spur more drilling and completions activity, according to industry experts. Read more

Register now to get free unlimited access to Reuters.com

(Reporting by Yuka Obayashi) Editing by Kenneth Maxwell

Our criteria: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.