Oil Price Dips In Iran China as Uncertainty Takes Over the Market
Crude oil prices started the day steady despite the reports of a slow economic growth from China. The prices dipped as opposed to the rally of up to 5% last week. Many analysts think that the calm in the market is deceptive.
London traded Brent which is the benchmark for oil in the outskirts of the U.s lost 29 cents. U.S West Texas Intermediate crude dropped by 63 cents to $59.58 per barrel.
China Growth Slows in Q2
China reports annual GDP growth of about 6.2% in Q2. This is the slowest it has been in 27 years. However, it was expected. Some analysts suggest that the country should implement further measures to support oil. It should also have room for aggressive stimulus is restricted by structural risks and high debt levels.
Also, it isn’t easy to predict the impact of the storm on crude prices. One main factor in the rally last week is the fact that the storm reached hurricane status. It landed in Louisiana early Saturday but weakened to just a storm.
Aside from the precautionary shutdown of up to 1.4 million barrels daily of output, some oil was awaiting refinement due to local refineries left idle. The Gulf of Mexico is responsible for providing 17% of the oil supply in the U.S
Also, the reduced refining activity may increase the crude stockpile in the U.S in the short term. It would make it difficult to match the drawdown of last week of 9.5 million barrels.
This implies that crude prices may experience a net loss and remain flat in the short term.