Crude oil prices settled lower Aug. 3 as the continued spread of COVID-19 stoked concerns of demand-destroying mobility restrictions in Asia.
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NYMEX September WTI settled down 70 cents at $70.56/b and ICE October Brent declined 48 cents to $72.41/b.
The rapid spread of delta variant of the coronavirus in Asia has stoked concerns that governments in the region could act quickly to institute new mobility restrictions. The Chinese government in July instituted mandatory quarantines at major ports, causing shipping backlogs and dislocations in the marine fuel oil market.
Market participants were preparing for a similar slate of measures in response to this latest outbreak. Airlines have canceled flights on certain routes, and mobility restrictions have been introduced in cities like Beijing.
NYMEX September RBOB settled down 39 points at $2.2708/gal and September ULSD declined 94 points to $2.1264/gal.
"While there remains plenty of cause for optimism - and I'm sure that will dominate more in the months ahead -- there's seemingly more focus on the delta spread, especially in China, the patches of softness appearing in the data and the risk of the Fed tapering too soon," OANDA senior market analyst Craig Erlam said in a note. "The manufacturing PMIs seem to have been the catalyst for the uncertainty this week, with both China and the US producing worse than expected prints."
The PMI data "feed into the narrative of peak growth and with the China data coming at a time of rising COVID cases, potentially darker days ahead," Erlam added.
Data released Aug. 1 showed that China's Purchasing Manager's Index fell from 50.9 in June to 50.4 in July, as its economy struggles with extreme weather and a resurgence in COVID-19 infections.
Meanwhile, data from the Institute of Supply Management showed a slowdown in US manufacturing activity, with national factory activity falling from 60.6 in June to 59.5 in July, its lowest since January.
37th Asia Pacific Petroleum Conference (APPEC 2021) | September 27-29, 2021
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