Oil prices fell on Monday after reports that China’s third-quarter economic growth did not rise as much as expected, underscoring concerns that surging coronavirus cases globally are impacting demand in the world’s largest oil importer.
The world’s second-largest economy in the third quarter expanded by 4.9% from a year earlier, missing analyst expectations, government data showed.
Refiners in China, the world’s second-largest oil user, slowed their processing rates in September and industrial metal imports, underpinned by government stimulus, were lower.
Brent crude for December slipped 30 cents, or 0.7%, to $42.63 a barrel. U.S. West Texas Intermediate crude for November was at $40.61 a barrel, down 27 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, world’s top oil consumer, fell.
The Chinese data showed growth in goods and services is softening while the data on crude processing and industrial metals output, given a lifeline from fiscal stimulus, were “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.
OCBC’s Lee added that investors are focusing on the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group happening later on Monday.
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 that a jump in Libyan output could push the oil market into surplus next year.
Energy firms in the U.S., 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 $40 a barrel over the past several months.