China Data Deepens Confusion Over Global Demand, Oil Prices Dip

Meanwhile, Canada is set to ship crude to multiple Asian countries in September: File Image/Pixabay

Confusion regarding the true state of global oil demand continued on Monday, with two key benchmarks extending their losses for a second session due to worries about China data.

Brent settled down 18 cents at $84.85 per barrel, while West Texas Intermediate settled down 30 cents at $81.91.

China's refinery output fell 3.7 percent in June from a year earlier, its third consecutive monthly drop, on planned maintenance; also, property downturn and job insecurity were said to be the culprits for that country's economy growing much slower than anticipated in the second quarter.

Giovanni Staunovo, analyst at UBS, remarked, "Chinese data including refinery runs and crude imports are not supportive, but demand growth elsewhere is still healthy."

Indeed, Natasha Kaneva, head of global commodity strategy at JPMorgan, earlier told clients that "both crude and liquids balances will tighten in the summer months, leading to significant stock draws."

But the market remains undecided overall: while the Organization of the Petroleum Exporting Countries (OPEC) sees demand increasing by 2.2 million barrels per day (bpd) in 2024 on solid economic growth, Western states see demand growing just under 1 million bpd as the global economy softens.

Meanwhile, TD Securities estimated that a break below $80 in WTI could force trend-followers to liquidate nearly 80 percent of their current long positions over the next week, and Daniel Ghali, a commodity strategist at TD, told clients that this suggests the window for large-scale algorithmic selling is now finally open.

In other oil news on Monday, Canada's extended TMX pipeline, which will triple the flow of crude from landlocked Alberta to that country's Pacific coast to 890,000 bpd, will ship cargoes of exports to China, Japan, and South Korea in September, the first Asian countries to benefit from the facility.

TMX crude exports are expected to clock in at 350,000-400,000 bpd and will compete with heavy grades from Latin America and the Middle East.