China's mixed economic signals lead to drop in oil prices
China has reported mixed signals from its economy. Industrial production and real estate investments fell short of expectations, while retail sales were better than forecasted. In response to this data, oil prices on the American market are falling on Monday.
China published several significant macroeconomic readings on Monday. Analysts point out that the data from the world's second-largest economy proved mixed for the oil market. On one hand, industrial production in China increased by 5.6% year-over-year in May, but it did not meet market expectations, which anticipated growth of 6.2%. Furthermore, from January to May, real estate investments fell by 10.1% year-over-year, worse than the forecasted 10%.
Oil is getting cheaper. China revealed new data
On the other hand, retail sales in China turned out better than expected, recording growth of 3.7% compared to the forecasted 3%.
A barrel of West Texas Intermediate oil for July delivery is currently $78.12 CAD, marking a 0.42% decrease. Meanwhile, Brent crude for August is priced at $82.29 CAD per barrel, a decrease of 0.40%.
Will china need more oil?
As noted by Gui Chenxi, an analyst at CITIC Futures Co., this is significant as the third quarter is traditionally a season of increased fuel demand, which should lead to higher oil refining by refineries.
Analysts also point out that investors expect a correction after substantial oil price increases last week in light of somewhat worse-than-expected data from China. However, experts predict that the tight situation in energy markets and increased seasonal demand in the coming months will support further increases in crude oil prices.
There are more reasons to support the maintenance of oil prices. Crude oil refining in China this year will, for the first time in many years, remain stable or even decrease—for the first time in 20 years, not including the COVID-19 pandemic period in 2022.
