Oil prices have declined as weak economic data from China revived worries of slowing economic growth.
Brent crude futures fell $0.49 to $62.25 a barrel, while US West Texas Intermediate (WTI) crude futures fell $0.23 to $56.18 a barrel, reported Reuters. Data released by industrial firms in China highlighted a contraction in profits in 2018, reversing the brief expansion in August 2019.
A faster-than-expected recovery in crude oil output this week in Saudi Arabia following terrorist attacks on two oil facilities also eased worries over potential major supply disruptions.
Analysts said that crude prices declined due to the rapid return of production from Saudi Arabia in less than two weeks after the drone attack.
OANDA senior market analyst Edward Moya was quoted by Reuters as saying: “Oil prices continued to slide lower after a drop in China’s industrial profits in August reinforced worries that the world’s second-largest economy continues to decelerate.”
Oil prices further witnessed a fall following an unexpected 2.4 million barrel build in US crude stocks last week. According to the analysts, crude stocks in the US may further rise over the near term, adding pressure to oil prices, as American refiners curb runs for maintenance.
AxiTrader Asia Pacific market strategist Stephen Innes said: “For most of the week … the market has been trading lower as oil bulls have been discouraged by the quicker-than-expected return of Saudi oil output.”
Innes further added that the expected lower demand for oil inputs into the US refineries typically sees US crude stocks swell. This is expected to pose a significant downside risk for prompt oil prices.