An oil tanker is loaded in Saudi Arabia. Picture: REUTERS
An oil tanker is loaded in Saudi Arabia. Picture: REUTERS

Tokyo — Oil prices fell on Tuesday, with Brent down a second straight day, after Chinese data showed slowing economic growth and US factory output dropped in September, raising fresh concerns about demand amid patchy recovery from the coronavirus pandemic.

Brent crude was down by 43c, or 0.5%, at $83.90 a barrel by 1.32am GMT after falling 0.6% on Monday. The contract is still up nearly 7% this month.

US oil fell 33c, or 0.4%, to $82.11 a barrel, having risen 0.2% in the previous session and nearly 10% this month.

Factory output in the US dropped the most in seven months last month as a global shortage of semiconductors slowed vehicle production, further evidence that supply constraints are a strain on economic growth.

In China, the world’s second-biggest economy, bottlenecks contributed to a decline in the growth rate to a one-year low as energy shortages and sporadic outbreaks of coronavirus hit the country.

China’s daily crude oil processing rate fell again last month to the lowest level since May last year. But with temperatures falling as the northern hemisphere winter approaches, prices of oil, coal and gas are likely to remain elevated, analysts said.

“A frigid winter has the potential to send energy prices even higher,” Citi Research commodities analysts said in a note, after upgrading their forecast for Brent oil for the rest of 2021 to $85 a barrel from $74 a barrel.

Colder weather has already started to grip China, with the temperature forecast to fall to near freezing point in areas of the north, according to AccuWeather.com.

Also helping keep a lid on prices, US oil output is rising. Production in the largest shale formation in the US is expected to gain further next month, according to an official report.

Reuters

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