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Oil Down, Surge in COVID-19 Cases Globally Continues to Threaten Fuel Demand
Oil fell on Monday morning in Asia, falling more than 1% and dropping below the $70 mark. Concerns remained that the restrictive measures currently in place to curb the latest COVID-19 outbreaks would continue to dampen the fuel demand outlook.
Brent oil futures fell 1.06% to $69.84 by 12:36 AM ET (4:36 AM GMT) after edging lower during the previous week. WTI futures slid 1.11% to $67.45 after recording a slight rise last week. WTI futures also rolled over to the Oct 21 contract on Aug. 15.
“Crude oil remained under pressure as the fast-spreading Delta variant of COVID-19 casts a cloud over the outlook for demand,” ANZ Research analysts said in a note.
Data released in China earlier in the day said industrial production rose 6.4% year-on-year in July, and retail sales grew 8.5% year-on-year in the same month, both lower than expected. A recent tightening of restrictive measures due to the latest COVID-19 outbreak was a likely contributor to the disappointing data from the world’s top oil importer.
European stock markets are expected to open lower Monday, as a string of weak Chinese economic data releases points to a Covid-induced slowdown at one of the globe’s key growth engines.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.5% and the FTSE 100 futures contract in the U.K. fell 0.5%.
European markets are set to suffer from the weak sentiment in Asia Monday after data released in China earlier in the day showed industrial production rose 6.4% year-on-year in July, and retail sales grew 8.5% year-on-year in the same month, both lower than expected.
This slowdown is the result of the second largest economy in the world tightening mobility restrictions to combat the spread of the highly-transmissible delta variant of the Covid-19 virus.
Gold Down, but Gets Small Boost From Sharp Drop in U.S. Consumer Sentiment
Gold was down on Monday morning in Asia, but remained near a one-week high. A sharp drop in U.S. consumer sentiment reduced concerns about early asset tapering by the U.S. Federal Reserve and gave the yellow metal a small boost.
Gold futures inched down 0.04% to $1,777.55 by 12:02 AM ET (4:02 AM GMT), after hitting its highest level since Aug. 6, or $1,780.82, earlier in the session.
Data released last Friday said consumer sentiment dropped to its lowest levels since 2011. The Michigan consumer expectations for August was 65.2, while the Michigan consumer sentiment was 70.2.
The data pared bets that the Fed will introduce asset tapering and interest rate hikes earlier than expected. Further data, including core retail sales and retail sales, will be released on Tuesday.
Investors now await Fed Chairman Jerome Powell’s comments at a virtual town hall meeting with educators and students on Tuesday, as well as the minutes from the Fed’s last policy meeting which will be released a day later.
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