Being the world’s second largest oil consumer, China is drawing attention as its factory activity continues to draw the wrong attention. Fears that the economic recovery in Asia is taking steps backward mean that this will undoubtedly affect supply and demand moving forward. Factory activity in China fell heavily in July to numbers not seen in about a year, with reports showing that most of the factories pulling back on activity levels are export-type factories and small manufacturing plants. Investors will be keeping a close eye on Chinese manufacturing as supply and demand are still trying to rebound from the virus.
WTI crude saw a huge drop Tuesday, shedding $2.70 (-3.6%). Oil prices continued their selloff, with market participants anxious over climbing COVID cases and the potential of Iranian oil returning to the market. COVID cases are on the rise around the world, with global new cases hitting 623,000 last week. The Delta variant is now considered to be as transmissible as chickenpox, and the growing Lambda variant is showing increased transmissibility and vaccine resistance. Climbing cases and the possibility of a vaccine-resistant strain are threatening to send the world back to lockdowns, repeating some of 2020’s closures.
Oil prices continued sinking Wednesday morning, extending the streak of losses to four days. Although COVID variants have been a talking point for months now, sentiment is now shifting markedly. Before, variant concerns were met with a retort that vaccines were available and just needed time. Now vaccine rollouts have slowed, and recent reports show that vaccinated individuals, though generally safe from harm themselves, may be as contagious as unvaccinated individuals. The implications for public health are dire – already, some states have more COVID-related hospitalizations than they did during previous waves of the pandemic. Still, governments are hesitant to repeat last year’s shutdowns, so the question now is whether consumers and businesses will react to the higher health threat or continue unabated.
This Week in Energy Prices
Today crude opened at a price of $69.14, a change of $4.77 from Monday’s opening price of $73.91. Throughout the week crude fell steadily every day with Tuesday being the lowest opening price of the week at $68.06.
Today diesel opened at $2.1027, a change of $0.0883 from Monday’s opening price of $2.1910. Thursday’s opening price represented the lowest of the week as diesel prices fell steadily every day.
Today gasoline opened at a price of $2.2951, a change of $0.0352 from Monday’s opening price of $2.3303. Gasoline prices throughout the week also dropped steadily with Thursday posting the lowest opening price of the week at $2.2464.