Oil Price Falls Over 1% As Demand Dampens

Oil dropped by more than 1 per cent on Monday after weaker-than-expected Chinese economic growth fuelled concern over demand in the world's second-biggest oil consumer while a partial restart of halted Libyan output also pressured prices.

China's gross domestic product (GDP) grew 6.3 per cent year on year in the second quarter, compared with analyst forecasts of 7.3 per cent, with its post-pandemic recovery faltering rapidly owing to weakening demand at home and abroad.

"The GDP came in below expectations, so will do little to ease concerns over the Chinese economy," said Warren Patterson, ING's head of commodities research.

Brent crude fell 96 cents or 1.2 per cent to USD 78.91 a barrel by 1153 GMT and US West Texas Intermediate crude dropped by 90 cents or 1.2 per cent to USD 74.52 on a second straight day of losses for both contracts.

"China data was always looked forward to with a degree of hope; well, for bulls anyway," John Evans of oil broker PVM said in a report. "However, the contemporary economic backdrop for Asia's driver seems to now be wheeled out for the bears."

Oil briefly rose after a Reuters news alert on Saudi Arabia extending a voluntary output cut. The alert was subsequently withdrawn because it repeated news published on 4 June.

Both benchmarks had notched three weeks of gains and touched their highest since April last week, finding support from OPEC+ output curbs and unplanned outages in Libya and Nigeria.

Oil also came under pressure on Monday from the resumption of output at two of the three Libyan fields that were shut last week. Output had been halted by a protest against the abduction of a former finance minister.

In another sign of tighter supplies, Russian oil exports from western ports are set to fall by 100,000-200,000 bpd next month, a sign that Moscow is making good on a pledge for supply cuts in tandem with Saudi Arabia, two sources said on Friday.