SULAIMANI (ESTA) — Oil prices fell on Monday in holiday-sapped trade in Asia as concerns about weak economic growth in China, the world’s top oil importer, outweighed fears of potential supply stress from a looming European Union ban on Russian crude.
Brent crude futures fell 85 cents to $106.3 a barrel at 0511 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 90 cents to $103.8 a barrel.
Prices fell after China released data on Saturday showing that factory activity in the world’s second-largest economy contracted for a second month to its lowest since February 2020 because of COVID lockdowns, according to Reuters.
“A slowing to that extent, when China is already suffering from a property bust and worries about its [until recently] increased regulation, is potentially a major issue for commodity markets and the world economy,” Reuters quoted Tobin Gorey, a Commonwealth Bank commodities analyst, as saying.
Limiting the down side for oil prices is a possible dent in supply with the European Union leaning towards banning imports of Russian oil by the end of the year, two EU diplomats said after talks between the European Commission and EU member states on the weekend, according to Reuters.
Around half of Russia’s 4.7 million barrels per day (bpd) of crude exports go to the EU, supplying about one-fourth of the EU’s oil imports in 2020.
“In the absence of an immediate EU total oil embargo, eliminating mobility restrictions in China is necessary to drive oil out of its current range,” Reuters quoted SPI Asset Management Managing Partner Stephen Innes as saying .