Oil futures: Brent nears $70/b after mixed US economic data

17 Aug 2021

Quantum Commodity Intelligence – Crude oil futures bounced back mid-afternoon in Europe Tuesday after the release of mixed economic data in the US that showed strong manufacturing growth but weak retail sales.

Front-month October ICE Brent futures were trading at $69.84/barrel (1530 GMT), compared to Monday’s settle of $69.51/b.

At the same time, September NYMEX WTI was trading $67.48/b versus Monday’s settle of $67.29/b.

Earlier, Brent and WTI hit lows of $68.84/b and $66.54/b respectively.

Manufacturing output jumped 1.4% last month after falling 0.3% in June, the Federal Reserve said on Tuesday.

But retail sales in the US dropped 1.1% in July, as consumers held off from buying cars and there was a drop in online sales.

Oil futures have been under pressure from the resurgence of Covid, particularly in China. 

Writing for the UAE’s The National, Robin Mills, CEO of Qamar Energy, said; “The OPEC+ group has agreed a phased increase in production up to the end of next year, the Delta viral variant is threatening Chinese demand, and prices have fallen sharply, from over $76 per barrel at the end of last month to barely above $70 on Friday.”

Last week, the US administration called on the OPEC+ group to pump more oil in a bid to tackle higher domestic gasoline prices.

OPEC+ is scheduled to meet in early September, so an additional online gathering to discuss the US request was viewed as unlikely. 

Concerns over tumbling Chinese demand accelerated this week as high-frequency data revealed a sharp downturn in movement within the country.

Intercity mobility in China slumped in the seven days to August 15 compared with the average in July and the first week of August, according to data from technology company Baidu, with mobility down 15% on the week and 37% from the July average.

The Chinese mainland on Monday reported six new locally transmitted COVID-19 cases, the National Health Commission said in its daily report on Tuesday.

Among the local cases, three each were reported in Jiangsu and Hubei. Also reported were 36 new imported cases, including 15 in Yunnan, nine in Guangdong, seven in Shanghai, two in Guangxi, and one each in Shandong, Sichuan and Shaanxi.

US industry data on oil stocks is published later Tuesday, followed by government industry data on Wednesday.