Australian shares are set to open lower, following modest US losses. Oil slides. $A advances. Rate rise expected. Follow updates here.
Oil slumped as poor manufacturing figures across the globe fuelled concerns that an economic slowdown may sap demand for crude. Benchmark crude futures were 4.1 per cent lower to $US99.73 a barrel near 4pm in New York, while US oil futures slid 5.
1 per cent to $US93.63.Weekend data indicated a surprise contraction in Chinese factory activity, highlighting the cost of mobility curbs to tackle COVID-19 outbreaks. Purchasing managers’ indexes also weakened in South Korea and the euro region’s four largest members. The resurgence of coronavirus cases in China and the ramifications of the country’s strict pandemic strategies will continue to “negatively impact oil demand until at least November of this year, when a strategic change in Covid policy could be announced”, said Harry Altham, energy analyst for EMEA and Asia at StoneX Group. Oil trading has been volatile in recent months as concerns about a slowdown hurt demand for commodities even as underlying signals point to a relatively tight physical market. Data last week showed that the US economy shrank for a second quarter, while the Federal Reserve hiked rates by 75 basis points. Libya’s crude output has rebounded after a series of disruptions that more than halved supply, according to Oil Minister Mohamed Oun. Nationwide production has returned to 1.2 million barrels a day, a level last seen in early April, Oun said in a telephone interview. Fellow OPEC+ producer Russia has also seen flows disrupted as multiple buyers around the world shun its crude. Yet traders are studying the possibility of a slight increase in Russian oil exports after the European Union recently adopted a number of amendments to sanctions. Traders will also be looking to the OPEC+ meeting later this week to set output policy for September. While the US has lobbied Saudi Arabia to loosen the taps -- raising pressure on Russia -- Moscow and Riyadh recently reaffirmed their joint commitment to a stable market.
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