Oil Prices Drop on Weak Global Demand and Rising OPEC Supply
Brent crude futures settled down $2.71, or 3.41%, to $76.81 a barrel. U.S. West Texas Intermediate crude futures settled down $2.79, or 3.66%, at $73.52.
Both benchmarks fell by more than $3 per barrel at their session lows.
U.S. job growth slowed more than expected in July and unemployment increased to 4.3%, raising fears of a possible recession.
“We moved from a demand-driven market to a geopolitical one for maybe two days then we nosedived on all this economic data,” said Tim Snyder, chief economist at Matador Economics.
Economic data from top oil importer China and surveys showing weaker manufacturing activity across Asia, Europe, and the U.S. raised the risk of a sluggish global economic recovery that would weigh on oil consumption.
Falling manufacturing activity in China also inhibited prices, adding to concerns about demand growth after June data showed imports and refinery activity lower than a year earlier.
Asia’s crude imports in July fell to their lowest in two years, sapped by weak demand in China and India, data from LSEG Oil Research showed.
Meanwhile, a survey found that OPEC oil output rose in July as a rebound in Saudi Arabian supply and small increases elsewhere offset the impact of ongoing voluntary supply cuts by other members and the wider OPEC+ alliance.
The Organization of the Petroleum Exporting Countries pumped 26.70 million barrels per day (bpd) last month, up 100,000 bpd from June, according to the survey based on shipping data and information from industry sources.
An OPEC+ meeting on Thursday had left the group’s oil output policy unchanged, including a plan to start unwinding one layer of production cuts from October.
Oil investors are also watching the Middle East, where Lebanon’s Iran-backed group Hezbollah said its conflict with Israel had entered a new phase. Still, analysts noted no material disruption of oil supplies from the region as prices slumped to multi-week lows days after the killing of senior leaders of Iran-aligned militant groups Hamas and Hezbollah stoked fears of all-out war.
“Oil has been pumped up on just extraordinary jitters over the Middle East situation but here we are several days after a significant event,” said John Kilduff, partner at Again Capital in New York.
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