TOKYO- Oil prices fell on Tuesday, with Brent down a second straight day, after Chinese data showed slowing economic growth and US factory output dropped in September, raising fresh concerns about demand amid patchy recovery from the coronavirus pandemic.
Brent crude was down by 43 cents, or 0.5 percent, at $83.90 a barrel after falling 0.6 percent on Monday. The contract is still up nearly 7 percent this month.
US oil fell 33 cents, or 0.4 percent, to $82.11 a barrel, having risen 0.2 percent in the previous session and nearly 10 percent this month.
Factory output in the United States dropped the most in seven months last month as a global shortage of semiconductors slowed auto production, further evidence that supply constraints are a strain on economic growth.
In China, the world’s second-biggest economy, bottlenecks also contributed to a decline in the growth rate to a one-year low as energy shortages and sporadic outbreaks of coronavirus hit the country. read more
China’s daily crude oil processing rate fell again last month to the lowest level since May last year.
But with temperatures falling as the northern hemisphere winter approaches, prices of oil, coal and gas are likely to remain elevated, analysts said.
“A frigid winter has the potential to send energy prices even higher,” Citi Research commodities analysts said in a note, after upgrading their forecast for Brent oil for the rest of 2021 to $85 a barrel from $74 a barrel.
Colder weather has already started to grip China, with the temperature forecast to fall to near freezing point in areas of the north, according to AccuWeather.com.
Also helping keep a lid on prices, US oil output is rising. Production in the largest shale formation in the US is expected to gain further next month, according to an official report.
OPEC+ compliance with oil cuts fell slightly to 115 percent in September, sources said, indicating that as the alliance raises production targets, some members are still falling short as they face challenges in pumping more oil.
The Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ as the alliance is known, raised its output targets by 400,000 barrels per day (bpd) in September.
It has also agreed to raise them by a further 400,000 bpd in October and in November.
Underinvestment and maintenance problems have stymied efforts by Angola and Nigeria to raise output, an issue that is expected to continue impacting the West African producers in the near future.
