Oil prices dropped on Monday after China’s third-quarter growth was weaker than expected. The concerns increased that the world’s largest oil importer may get effected as the coronavirus cases growing globally.
According to government data, China, the world’s second-largest economy and the second-largest oil consumer, grew by 4.9% in the third quarter compared to a year ago and failed to meet expectations of 5.2%. Refineries in China slowed down their processing rates in September. Growth in goods and services is said to have softened, and crude oil processing data is disappointing.
China’s oil buying frenzy earlier this year is expected to slow in the fourth quarter due to high stocks and limited import quotas for independent refineries..
Brent crude for December LCOc1 slipped 20 cents, or 0.5%, to $42.73 a barrel by 0826 GMT. West Texas Intermediate (WTI) crude for November CLc1 was at $40.69 a barrel, down 19 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, the world’s top oil consumer, fell.
Investors focused on the Joint Ministry Monitoring Committee (JMMC) meeting of the OPEC + group. The possible decision of JMMC as to whether to delay plans to reduce the current supply cuts of 7.7 million barrels per day by 2 million barrels a day from January is being followed carefully.
There are increasing demands for OPEC + to cancel the current production cuts mitigation plan. However, the market must wait until the next OPEC + meeting on 30 November and 1 December for any concrete decisions.
Last week’s OPEC + Joint Technical Committee meeting outlined a dismal fuel demand prospect, with the idea that the prolonged second wave of the COVID-19 outbreak and the increase in Libyan production would prevent the oil market from accelerating next year.
US oil companies, the world’s largest oil producer, increased the number of oil and gas rigs the most since January last week. Because the crude oil prices have held around $ 40 / barrel for the last few months and the slight increase encouraged the producers.