Oil prices slipped on Monday after the release of underperforming, third-quarter economic growth results in the world’s largest oil importer China, which raised concerns over diminishing demand that has been hit by surging numbers of coronavirus cases.
International benchmark Brent crude was trading at $42.74 per barrel at 0623 GMT for a 0.44% decrease after closing Friday at $42.93 a barrel.
American benchmark West Texas Intermediate (WTI) was at $40.95 a barrel at the same time for a 0.02% decrease after ending the previous session at $40.96 per barrel.
Monday’s price slump was spurred by data showing that China’s economy has not yet recovered from the impact of the coronavirus pandemic.
According to data from the National Bureau of Statistics of China, the world’s second-largest economy grew by 4.9% - a rate that was less than the expectations of many analysts.
Moreover, as an indicator of short-term production in the country, the number of US oil rigs recorded the highest level since January with a rise of 12 to 205 last week compared to the previous week. This signals greater output while raising oversupply concerns.
Political risk and oil analyst Jose Chalhoub said oil prices are stuck between $40-42 as oil demand uncertainties especially in the aviation sector continue to weigh on the markets.
Noting the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group later on Monday, Chalhoub said a significant move to further cut oil production is not expected until the next JMMC in December. He did, however, allude to other factors including the coronavirus pandemic that is divisive for the global oil market.
"The upcoming US elections, the conflict in Nagorno Karabakh between Armenia and Azerbaijan along with the surge of oil output in Libya, which is currently around 500,000 barrels per day, are the main factors impacting the behavior of oil prices which are still unable to recover from the scars of the pandemic,” Chalhoub said.