(Bloomberg) — Oil tumbled by the most in two weeks as a fast-spreading delta variant posed a threat to demand and as data out of China signaled a slowdown.
Futures in New York declined as much as 4% on Monday. The virus is clouding the outlook for consumption as China faced a fresh outbreak, Thailand expanded its quasi-lockdown measures and infections in Sydney matched a record. Meanwhile, data indicated China’s economic activity eased in July and U.S. manufacturing data also showed some weakness.
Chinese manufacturing data “was below expectations. There are concerns that it is a function of Covid,” said Bob Yawger, head of the futures division at Mizuho Securities.
Crude prices are off to a shaky start in August after July’s small gain with the resurgence of Covid-19 offsetting the global demand recovery. At the same time, Saudi Arabia, Kuwait and the United Arab Emirates boosted their crude exports to multimonth highs last month, signaling a return of OPEC+ barrels to an uncertain market.
Oil has “given back some of last week’s gains in response to weaker China data and continued worries about the spread of the delta variant,” said Ole Hansen, head of commodities research at Saxo Bank A/S. Crude has settled into a range “with delta demand worries offsetting the current tight supply outlook.”
Meanwhile, the U.S. and Israel vowed to respond to a deadly drone attack on a tanker last week in a major waterway for global oil shipments that they blamed on Iran. Middle East foes Iran and Israel have traded multiple accusations of shipping attacks in recent months. But Thursday’s strike off the coast of Oman, which Tehran denied carrying out, was the first to kill crew members — a Romanian and a Briton.
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