Oil slips on China demand fears, supply worries limit losses

China’s economy slowed in March as consumption, real estate and exports were hit, taking the shine off faster-than-expected first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs and the Ukraine war. 

Brent crude, the global benchmark, fell 26 cents, or 0.2 per cent, to $111.44 at 1055 GMT, sliding from the highest since March 30 of $113.80 hit earlier in the session. US West Texas Intermediate was down 11 cents, or 0.1 per cent, at $106.84.

“Some Asian investors booked profits as they became worried about slowing demand in China,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Data on Monday also showed China refined 2 per cent less oil in March than a year earlier, with throughput falling to the lowest since October as the surge in crude prices squeezed margins and tight lockdowns hurt demand. 

Oil surged to the highest since 2008 in March, with Brent briefly topping $134, as Moscow’s invasion of Ukraine added to supply concerns due to sanctions on Russia and buyers avoiding Russian oil.

Adding to supply-side pressure, Libya’s National Oil Corp on Monday declared force majeure at Zueitina oil port and warned that “a painful wave of closures” had begun hitting its facilities. Libya had halted production from its El Feel oilfield on Sunday. 

“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said Jeffrey Halley, analyst at brokerage OANDA.

Russian production declined by 7.5 per cent in the first half of April from March, Interfax reported on Friday, and EU governments said last week the bloc’s executive was drafting proposals to ban Russian crude.

Those comments came before an escalation in the Ukraine war. Ukrainian authorities said missiles struck Lviv early on Monday and explosions rocked other cities as Russian forces kept up their bombardments after claiming near full control of the port of Mariupol.

REUTERS