Oil prices drop after China’s third-quarter economic data

19 October 2020 (Last Updated October 19th, 2020 11:02)

Oil prices have edged down after China’s third-quarter economic growth did not rise as much as expected.

Oil prices drop after China’s third-quarter economic data
Brent crude futures for December were down $0.20 or 0.5% to $42.73 a barrel, Reuters reported. Credit: Thomas Mühl / Pixabay.

Oil prices have edged down after China’s third-quarter economic growth did not rise as much as expected.

It highlighted the fears that the surging cases of global Covid-19 infections are impacting the demand in China.

Brent crude futures for December were down $0.20 or 0.5% to $42.73 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.19, touching $40.69, Reuters reported.

China, the world’s second-largest economy, expanded by 4.9% in Q3-2020 compared to last year.

According to government data, the value of expansion missed analyst expectations of 5.2%.

The news agency cited Oversea-Chinese Banking Corp (OCBC) economist Howie Lee as saying that the Chinese data showed growth in goods and services while the crude processing data was ‘disappointing’.

Lee said: “We’re likely going to see prices being soft for the rest of the day.”

He added that investors are focusing on the output of the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group expected to happen later on 19 October.

OPEC+ comprises the Organization of the Petroleum Exporting Countries (OPEC) and producer allies such as Russia.

As part of the meeting, the JMMC may decide whether it will delay plans to reduce its current supply cuts of 7.7Mbpd by 2Mbpd, starting in January.

Last week, OPEC+ expressed concerns about a weaker demand outlook due to the second wave of Covid-19 infections.

However, analysts said that the market may have to wait until the next OPEC+ meeting on 30 November and 1 December for any ‘concrete decision’.