Oil prices fell on Monday in Asian trade over the holidays, with concerns over slowing economic growth in China, the world’s largest oil importer, outweighing fears of potential supply disruptions due to of an impending EU ban on Russian crude.
Brent crude futures fell $1.21, or 1.1%, to $105.93 a barrel at 0205 GMT, while US West Texas Intermediate (WTI) crude futures fell. fell 99 cents, or 1%, to $103.70 a barrel. Markets in Japan, India and across Southeast Asia were closed for public holidays on Monday.
Prices fell after China released data on Saturday showing factory activity in the world’s second-largest economy contracted for a second month to its lowest level since February 2020 due to COVID lockdowns.
“A slowdown of this magnitude, when China is already suffering from a real estate crisis and worries about its increased regulation (until recently), is potentially a major problem for commodity markets and the global economy” , said Tobin Gorey, commodities analyst at Commonwealth Bank. , in a footnote.
On the supply side, Libya’s National Oil Corp (NOC) said on Sunday it would temporarily resume operations at the Zueitina oil terminal to reduce stocks in storage tanks to avert an “imminent environmental catastrophe” in the port. Read the full story
In late April, NOC declared force majeure on some shipments to Zueitina as political protesters forced a number of oil facilities to suspend operations.
Limiting lower oil prices is a potential supply breach, with the European Union leaning towards banning Russian oil imports by the end of the year, two European diplomats said after talks between the European Commission and EU Member States this weekend.
About half of Russia’s 4.7 million barrels per day (bpd) of crude exports are destined for the EU, providing about a quarter of EU oil imports in 2020.
While Western countries curbed the purchase of Russian oil as sanctions hit the country’s shipping and export insurance, the impact on global supply was cushioned as India picked up cargoes cheap russians.
Royal Bank of Canada analysts have estimated that India’s imports of crude from Russia rose from less than 100,000 bpd in 2021 to 800,000 bpd in April and expect India to continue rising its imports as long as Washington does not impose secondary sanctions.
Reuters reported on Friday that Indian refiners were negotiating a six-month oil deal with Russia to import millions of barrels a month.