Oil futures fell Monday, with the commodity under pressure after a round of weak China data underscored the potential damage to demand from the spread of the delta variant of the coronavirus that causes COVID-19.
West Texas Intermediate crude for September delivery
the global benchmark, was off $1.79, or 2.5%, at $68.80 a barrel on ICE Futures Europe.
July data out of China showed retail sales and industrial production disappointed, along with a January-to-July measure of fixed-asset investment. Meanwhile, the Taliban’s takeover of Kabul and the fall of the Afghanistan government was seen contributing to a weaker tone in financial markets but did little to add a risk premium to crude prices.
“The debacle in Afghanistan has attracted a lot of attention lately but there has been no visible market impact,” said Marios Hadjikyriacos, senior investment analyst at XM, in a note.
“Oil prices are instead trading lower on Monday as fears around a slowdown in Asian demand overpowered hopes for supply disruptions in case the instability in Afghanistan spreads beyond its borders,” the analyst said.
Digging into the China figures, July crude-oil processing fell to 59.06 million tonnes, or 13.9 million barrels a day, the lowest since May 2020, said Carsten Fritsch, analyst at Commerzbank. That was down 0.9% year over year, the first such negative reading since March 2020.
He noted refineries had processed a record 14.8 million barrels a day in June, but a string of low, monthly import figures had indicated the pace would have to slow.
In the first seven months of 2021, Chinese refineries still processed nearly 9% more crude oil than in the same period a year earlier, he noted, “as well as more than ever before.”
“Some refineries have announced that they may reduce their output even further in August, citing the spread of the delta variant as the reason,” Fritsch wrote.