Oil prices tumble over 3 per cent on demand concerns, OPEC supply boost

• Financial

On Monday, both US and UK crude oil futures’ prices had nosedived as much as 3 per cent as weak factory data in China and the United States alongside an unexpected boost in OPEC supply had weighed heavily on investors morale, while a resurgence of pandemic outbreak with delta variants surging at a breakneck pace across advanced economies had stoked fresh fears of a feeble oil demand.

On top of that, the 14-member OPEC (Organization of Petroleum Exporting Countries) alongside its Russia-backed allies had agreed last month to increase output by 0.4 million bpd (barrels per day) each month between August and December, prompting investors to turn their tails amid frets of an oversupply.

Nevertheless, in the day’s steep downfall in crude oil futures’ prices was almost entirely galvanized by weak manufacturing data from the US and China, as China July factory activity had fallen by the most in more than fifteen months in July and Tempe-based supply management associated ISM said earlier in the day that its index for US national factory activity had collapsed to 59.5 in July from a 60.6 a month earlier, the lowest level since January, while an unprecedented uptick in OPEC July supply to a 15-month peak had fuelled up the fires further.

Crude oil prices plummet as oversupply fears feather

Citing statistics, in the day’s commodity market closure, Brent crude had wrapped up the day 3.3 per cent lower to $72.89 per barrel, while US West Texas Intermediate crude oil contracts had dived as much as 3.6 per cent to settle down the day at $71.26 a barrel.

Meanwhile, citing a caustic oil demand outlook in context of a rise in delta variants across developed economies, president of Ritterbusch and Associates LLC in Galena, Illinois, Jim Ritterbusch said, “Energy futures...are still expressing concerns over slowed production consumption as coronavirus cases are back on the rise in several regions of the U.S. as well as several countries overseas”.