On Monday, crude prices skidded on broader concerns about the weak economic growth in China, the largest oil importer.
Brent crude futures declined 2.87% or 3.01 points to $104.15 per barrel. It completely reversed an upturn of 1.63% to $109.34 last Friday.
West Texas Intermediate contracts also slashed 3.13% or 3.25 points to $101.42 per barrel. The US benchmark trailed its last drop of 0.64% to $104.69 per barrel.
Accordingly, prices dwindled after Beijing released a downbeat economic data on Saturday.
Chinese Manufacturing Purchasing Managers Index revealed that factory activity contracted for a second month to its lowest since February 2020. The key indicator posted at 47.40 in April, falling short of the expected 48.00.
Analysts explained that the slowdown in the manufacturing sector adds weight to the country’s struggles from a property bust. In addition, worries about its increased regulation are potentially a significant issue for commodity markets and the world economy.
Subsequently, lockdowns in China’s biggest cities, including Shanghai, slammed output and snarled supply chains.
Last Friday, Beijing further stated plans to provide support to the economy. The local government also signaled an easing of a painful tech crackdown.
However, this announcement follows several recent pledges, and traders are yet to see any concrete measures. Most market participants wanted to spot a softer approach to controlling the virus.
On the supply side, Libya’s National Oil Corp mentioned it would temporarily continue its operations at the Zueitina crude terminal. This move will reduce stockpiles in storage tanks to avert an imminent environmental disaster at the port.
Last month, NOC declared force majeure, citing uncontrollable events, on several shipments at Zueitina. This decision came as political protesters forced many oil facilities to halt operations.
EU weighs Russian crude ban
Meanwhile, the continued talks of the European Union to scale back Russia’s oil imports provide support to crude prices.
This move limits the downsides for the commodity. Correspondingly, diplomats cited that the EU leans toward the ban by the end of the year.
Notably, half of Moscow’s 4.70 million barrels per day (bpd) of crude exports proceed to Europe. Thus, the country accounted for about one-fourth of the region’s oil imports over the last two years.
The potential stoppage follows embargoes by the United States and Britain. Moreover, Western countries have curbed the purchases of the Kremlin energy products. Subsequently, dragging sanctions have hit shipping and insurance for the country’s exports.
Eventually, the impact on global supply gradually eased as India picked up heavily discounted Russian cargoes.