Oil prices fall on higher output and China slowdown

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International oil prices dipped in early August trading as investors eyed slowing Chinese economy and the envisaged rise in world production. A survey showed that the factory activity in China has slipped sharply. The country is the world's second biggest oil consumer, Reuters elaborated. Still the oil producers from OPEC are enforcing their vows to rise output.

The crude demand outlook is on shaky ground and will probably not improve amid ongoing new Covid-19 wave and slowing global vaccination. China's factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, in part on high product prices, a business survey showed on Monday, underscoring challenges facing the world's manufacturing hub.

The weaker results in the private survey, mostly covering export-oriented and small manufacturers, broadly confirmed the official survey. The activity is growing at the slowest pace in 17 months.

Also weighing on prices,was that oil output from the Organization of the Petroleum Exporting Countries (OPEC) rose in July to its highest since April 2020, as the group further eased production curbs under a pact with its allies while top exporter Saudi Arabia phased out a voluntary supply cut.

While coronavirus cases continue to climb globally, analysts said higher vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.

US will not lock down again to curb Covid-19 but "things are going to get worse" as the Delta variant fuels a surge in cases, mostly among the unvaccinated, top US infectious disease expert Dr. Anthony Fauci said on Sunday. India's daily gasoline consumption exceeded pre-pandemic levels last month as states relaxed Covid-19 lockdowns while gasoil sales were low, signalling subdued industrial activity in July.

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