Oil down 1% on weak China GDP data, resumption of Libya output

Oil prices extended their decline into a second session on Monday after China’s second-quarter growth came in weaker than expected, fueling concern about demand in the world’s No. 2 oil consumer, while Libya resumed production on the weekend.

Brent crude futures fell 91 cents, or 1.1 percent, to $78.96 a barrel by 0628 GMT, and U.S. West Texas Intermediate crude was at $74.55 a barrel, down 87 cents, also down 1.1 percent.

China’s gross domestic product grew 6.3 percent year on year in the second quarter, data released by the National Bureau of Statistics showed, compared with analysts’ forecast for growth of 7.3 percent, with its post-pandemic recovery faltering rapidly due to weakening demand at home and abroad.

“The GDP came in below expectations, so will do little to ease concerns over the Chinese economy,” said Warren Patterson, ING’s head of commodities research.

READ: China’s Q2 GDP growth slows to 0.8% q/q, raises stimulus expectations

Chinese refineries processed 1.6 percent more crude daily in June than May as they ramped up operations after spring maintenance, NBS data also showed, in line with strong imports by the world’s top crude importer last month.

“Apparent oil demand grew at a strong pace year on year, but the market seems focused on the headline (GDP) numbers,” Patterson said.

Beijing is likely to be cautious in timing any new stimulus measures, wary of driving commodities prices higher, said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.

“They are stockpiling crude at low prices, and waiting for recession to hit the West before going full on with stimulus,” Grasso said.

Prices softened after both benchmarks last week notched a third straight week of gains and touched their highest since April, after output was shut at oilfields in Libya and Shell halted exports of a Nigerian crude, tightening supply.

READ: Oil slips after Libya resumes output, China data eyed

Two of the three Libyan oilfields that were shut on Thursday, the Sharara and El Feel with a total production capacity of 370,000 barrels per day (bpd), resumed on Saturday evening, four oil engineers and oil ministry said.

The 108 field remained shut. Output was halted in protest against the abduction of a former finance minister.

In Russia, oil exports from western ports are set to fall by some 100,000-200,000 bpd next month from July, a sign Moscow is making good on a pledge for fresh supply cuts in tandem with OPEC leader Saudi Arabia, two sources said on Friday.

READ: Russian oil exports hit near three-year high in March: IEA

“Crude was in overbought territory at 12-week highs. The prop from the financial markets, which were cheering renewed expectations of a ‘soft landing’ for the U.S. economy, was temporary,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

The pullback has begun and will likely extend further as attention returns to economic worries, Hari added.