Oil traded near $79 a barrel in London as traders weighed disappointing Chinese economic data and restarting Libyan supplies against signs of a tightening market.
(Bloomberg) — Oil traded near $79 a barrel in London as traders weighed disappointing Chinese economic data and restarting Libyan supplies against signs of a tightening market.
Global benchmark Brent briefly spiked when Reuters News reported an extension of Saudi Arabia’s oil-supply cuts to the end of next year, which the agency later retracted. Futures were down 1.5%.
China’s economy expanded more slowly than expected in the second quarter, with consumer spending easing notably in June, according to data released on Monday. Still, apparent oil demand in the world’s top crude importer grew 14% last month from a year earlier.
Production was restarted at Sharara, one of Libya’s biggest oil fields, after protesters left the site, a person familiar with the matter said. Before the disruption last week, it was producing about 250,000 to 260,000 barrels a day.
“China remains an antidote to bulls,” said John Evans, an analyst at brokers PVM Oil Associates Ltd. in London. “China data was always looked forward to with a degree of hope, for bulls anyway. The contemporary economic backdrop for Asia’s driver seems to now be wheeled out for the bears.”
Crude has rallied over the past three weeks but remains lower this year as China’s lackluster economic recovery and the Federal Reserve’s campaign of monetary tightening weighed on demand. US central bank officials are expected to raise borrowing costs again this month, and have signaled they’re still open to further increases later in the year.
Still, there are some signs the market is finally tightening this half, with OPEC+ heavyweights Saudi Arabia and Russia both reducing crude exports. Those curbs, along with the outages in Libya and an ongoing supply disruption in Nigeria, had helped Brent to briefly surpass $80 a barrel last week.
Oil’s recent rise has meant that the price of Urals crude exported from Russia has exceeded the $60 price cap set by the Group of Seven to curb Moscow’s oil revenue. That’s likely to add banking and shipping woes to buyers of the oil including India and China, with one protection and indemnity provider already flagging possible delays from financial and technical service providers.
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