Oil prices fall on weaker growth in China and property downturn

theguardian.com:

Global oil prices have dropped amid concerns over weaker growth in the Chinese economy caused by repeated Covid lockdowns and a downturn in the property sector.

A barrel of Brent crude fell by about 5% to below $94 (£78) on Monday, hitting the joint lowest levels since the Russian invasion of Ukraine as traders reacted to weaker figures from the world’s second-largest economy.

China’s central bank unexpectedly cut interest rates on its key lending facilities for the second time this year after disappointing official growth figures.

Factory output in the country’s industrial sector grew by 3.8% in July from a year earlier, below analysts’ forecasts for growth of 4.6% in a Reuters poll. Retail sales rose by 2.7% from a year ago, again significantly below expectations, as China’s economic recovery from pandemic lockdowns earlier this year showed signs of fizzling out.

China’s economy narrowly escaped a contraction in the second quarter, hobbled by the lockdown of the commercial hub of Shanghai and a deepening downturn in the property market, as well as persistently weaker levels of consumer spending.

The country’s property sector, rocked by a mortgage boycott as thousands of homebuyers refuse to keep up with payments on unfinished flats bought off plan, also weakened in July.

Julian Evans-Pritchard, a senior China economist at the consultancy Capital Economics, said: “We think the outlook will remain challenging in the coming months as exports turn from tailwind to headwind, the property downturn deepens, and virus disruptions remain a recurring drag.”

As one of the world’s biggest energy consumers, weaker growth in the Chinese economy would drag down demand for crude and other natural resources. Energy traders are also eyeing the