Q2 GDP Growth Rate 6.3% 'Below Expectations'
Brent and WTI Weakness
Impact of Libya Oil Production Resumption
International oil prices are falling as China's economic recovery appears weaker than market expectations.
On the 17th, Brent crude oil traded at $79.15 per barrel, down 0.9% from the previous trading day. West Texas Intermediate (WTI) crude also dropped 0.9% to $74.75.
Oil prices slipped following news of a slowdown in China's second-quarter economic growth, the world's second-largest oil consumer. China's National Bureau of Statistics announced that the country's GDP grew 6.3% year-on-year in the second quarter, below the market forecast of around 7%. The youth unemployment rate (ages 16-24) also hit a record high again at 21.3%, casting a shadow over the Chinese economy.
Contrary to expectations of a reopening-driven recovery at the end of last year, the delayed economic rebound is expected to reduce oil demand, weighing on oil price gains.
Warren Patterson, Head of Commodity Research at ING, analyzed, "China's GDP growth falling short of market expectations will do little to dispel concerns about the Chinese economy." He added, "While (China's) oil demand increased compared to the same period last year, the market seems focused on the GDP figures."
On the supply side, the resumption of oil production in Libya is also contributing to the decline in oil prices. In Libya, protests erupted following the kidnapping of a former minister, leading to the closure of 108 oil fields, but production resumed on the 15th.
The market expects the Chinese government to announce large-scale economic stimulus measures in the second half of the year. However, there are forecasts that the timing of the stimulus announcement may be carefully decided due to concerns over rising commodity prices.
A market expert said, "China is stockpiling oil at low prices," adding, "They are waiting for a recession to hit the West before rolling out stimulus measures."
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