Oil prices fell on Monday on mixed Chinese economic data and signs that the impact of a tropical storm on U.S. Gulf Coast production and refining would be short-lived.
A horizontal drilling rig on a lease owned by Parsley Energy operates at sunrise in the Permian Basin near Midland, Texas U.S. August 24, 2018. REUTERS/Nick Oxford
Chinese industrial output and retail data topped expectations, but overall figures showed the country’s slowest quarterly economic growth in decades, dimming the outlook for crude demand.
Brent crude futures LCOc1 dropped 12 cents to $66.60 a barrel by 12:04 p.m. EDT (1604 GMT), while U.S. crude CLc1 shed 40 cents to $59.81 a barrel.
Crude oil imports from China fell in June for a second straight month, but analysts at ANZ bank said China’s imports year-to-date still looked strong.
China’s oil throughput rose to a record 13.07 million barrels per day in June, up 7.7% from a year earlier, following the start-up of two new large refineries, official data showed.
Still, economic growth of just 6.2% in the second quarter of 2019 - the weakest in 27 years - highlighted the impact of trade tensions with Washington and raised the possibility that more incentives might be needed to jump-start the economy.
“The basic message is that the second half of this year will see some depletion in global oil inventories but this will be followed by a dismal 2020, especially the first six months of next year,” PVM analyst Tamas Varga said.
Refineries in the path of Tropical Storm Barry continued to operate after the storm prompted energy companies to slash offshore U.S. Gulf of Mexico crude output by 73%, or 1.4 million bpd.
“The short-term impact from the storm is going to be felt, but the longer term impact is going to be negligible,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Easing tensions between the West and the Middle East also limited oil futures, Flynn said.
“It seems that some of the concerns that we were close to a military conflict with Iran has eased a little bit, so that has also weighed on prices,” he said.
Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran was ready to hold talks with the United States if Washington lifted sanctions and returned to the 2015 nuclear deal it quit last year.
British Foreign Secretary Jeremy Hunt said there remained a “small window” of time to save the Iran nuclear deal as Tehran signaled it would ramp up its nuclear program.