West Texas Intermediate slid below $97 a barrel Monday following an unexpected decline in Chinese productivity as the country seeks to combat sporadic coronavirus outbreaks within factories. This comes after a 7% decline in July that marked the first back-to-back monthly loss since late 2020.
Although China’s recent pandemic struggles play a role in this decline, Giovanni Staunovo, a commodity analyst at UBS Group AG, emphasized that it is not the only factor. “There are many reasons why oil is down. Weak Chinese and European PMIs, as well as recovering Libyan production,” Staunovo explained.
Libya has incurred a significant decrease in crude output following several disruptions. According to the nation’s oil minister, production levels were halved as a result. The minister mentioned during a telephone call, however, that domestic output has rebounded to a level of 1.2 million barrels a day; a level that was last reached in April.
Beyond China, several other major powers in Asia and Europe have faced oil production slowdowns as well. South Korea and the euro area’s four largest members have all faced weakening purchasing managers’ indexes while the United States economy shrank during the second quarter.