Crude Oil Slips; Tone Downbeat Despite Chinese Growth

Crude oil prices weakened Monday in European trading as the release of healthy Chinese economic data was not enough to turn around the recent downbeat tone in the market.

By 4:45 AM ET (0945 GMT), U.S. Crude futures were down 0.1% at $52.38 a barrel, while Brent futures were down 0.1% at $55.02 a barrel. Both benchmarks dropped over 2% on Friday.

U.S. Gasoline RBOB Futures were down 0.5% at $1.5213 a gallon.

Earlier Monday, new data showed China’s GDP expanded 6.5% in the fourth quarter of 2020. Overall, GDP was up 2.3% for the year, making it the only major economy to have avoided a contraction in 2020.

The figures highlight a rapid turnaround for China after its economy, the world’s second largest, declined in early 2020 for the first time in more than four decades.

Sectoral breakdowns of the data showed Chinese refineries nearly matching November’s record throughput rates in December, at over 14.1 million barrels a day.

However, this data, while positive, is backward-looking. Worries are growing about future demand given the country locked down almost 30 million people last week in order to contain a new outbreak of Covid-19 in the Hebei region near Beijing. Based on the highly transmissible nature of the new strains of the virus currently working their way through Europe, this outbreak could easily make its way to Beijing itself, with the associated impact on Chinese demand.

In Europe, frustrations are growing over the slow rollout of the vaccines as well as the length of time movements have been restricted in order to combat the virus. Several thousand people held an unauthorized protest in Amsterdam on Sunday before being dispersed by riot police. France extended a 12-hour curfew to the whole of the country, while Austria extended its lockdown measures through February 7th.