Oil prices dropped on Friday after China reported its weakest quarter of economic growth in nearly three decades. It dragged down by a trade dispute with the United States.
Global benchmark Brent crude oil futures tumbled by 34 cents, 0.6%, to $59.57 a barrel.
U.S. West Texas Intermediate crude futures fell by 12 cents, or 0.2%, to $53.81 per barrel.
Also, China’s economic growth slowed to 6% year-on-year, its weakest rate in27-1/2 years. It came after soft factory production amid ongoing trade tensions with the U.S and dull domestic demand.
WTI crude demand growth tends to pursue economic growth firmly.
Moreover, the slowing economic growth outdated China’s record refinery throughout the minds of investors. Analysts expect China can only do little to stimulate its economy.
Throughout September, refinery rose 9.4% from a year earlier to 56.49 million tons. It is on the increase from new refineries and as independent refiners continued activity after maintenance.
However, China’s third-quarter GDP growth was slightly below expectations. Also, expecting the weak data, chief market strategist at CMC market says an impact on traders and oil trading volumes are low.
U.S. Crude oil stockpiles rose last week, according to EIA. Refinery output fell to a two-year low, while gasoline and distillate fuel inventories dropped.
In comparison with analysts’ expectations for an increase of 2.9million barrels, U.S crude inventories surged by 9.3 million barrels on Oct. 11.
OPEC and its partners agreed to limit their oil output by 1.2 million barrels per day until March 2020.
OPEC reduced its 2019 global oil demand growth forecast to 0.98 million bpd. It left its 2020 demand growth estimate consistent at 1.08 million bpd.
Oil Prices fell Amid Surging Crude Stockpile, Weak China GDP Growth
Oil prices fell on Friday after the Energy Information Administration reported that U.S. oil inventories rose more than expected. Also, weak China’s GDP growth weighed.
Crude stockpiles increased 9.3 million barrels last week, according to EIA.
Contrarily, gasoline inventories dropped by 2.56 million barrels. The expected drawdown is about 1.21 million barrels.
Distillate inventories dip by 3.8 million barrels, with analysts predicting a drop of about 2.4 million barrels.
The decrease in fuel stockpiles came after refinery fell to just over 83% last week. It is one of the lowest in years after the peak summer driving season. Also, refiners usually wind down operations during the fall season to do plant repairs. This year, many refineries are taking longer to return to assure compatibility with new maritime fuel rules.
Analyst Barani Krishnan says refiners are socking the oil bulls with their preservation. Also, it is telling with this large crude build, which is more than triple than last week.
Hence, the joint technical committee monitoring a global deal to reduce output between the Organization of the Petroleum Exporting Countries (OPEC) and partners. This includes Russia, found agreement with cuts for September set at 236%. This is according to four OPEC sources.
ANZ Research says there are concerns about softer growth in the demand for oil. Also, there are doubts about OPEC’s ability to balance the market on the current production cut-rate. This will be a critical move on prices in the future.