Oil prices fall on fading storm impact, Chinese economic data

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NEW YORK (Reuters) – Oil prices edged lower on Monday on signs that the impact of a tropical storm on U.S. Gulf Coast production and refining would be short-lived, while Chinese economic data dimmed the crude demand outlook.

Oil prices fall on fading storm impact, Chinese economic data

A horizontal drilling rig on a lease owned by Parsley Energy operates at sunrise in the Permian Basin near Midland, Texas U.S. August 24, 2018. REUTERS/Nick Oxford

Easing tensions between the West and the Middle East also weighed on oil futures.

Brent crude futures LCOc1 dropped 14 cents to $66.58 a barrel by 1:53 p.m. EDT (1753 GMT), while U.S. crude CLc1 shed 57 cents, or 1%, to $59.64 a barrel.

One U.S. Gulf Coast refinery was restarting after shutting under threats of Tropical Storm Barry, while other refineries in the path of the storm continued to operate.

U.S. offshore oil producers restarted 4% of the production shut by Barry last week, according to a report on Monday by the U.S. Bureau of Safety and Environmental Enforcement (BSEE). Energy companies had slashed offshore U.S. Gulf of Mexico crude output by 73%, or 1.4 million bpd.

“This market’s muted response to Gulf Coast storm activity appears to suggest that (Gulf of Mexico) production curtailments will prove minimal while any lost output could easily be offset,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Chinese data showed industrial output and retail data beat expectations, but overall figures showed the country’s slowest quarterly economic growth in decades.

China’s oil throughput rose to a record 13.07 million barrels per day in June, up 7.7% from a year earlier, following the start-up of two new large refineries, official data showed.

Still, economic growth of just 6.2% in the second quarter of 2019 – the weakest in 27 years – highlighted the impact of trade tensions with Washington and raised the possibility that more incentives might be needed to jump-start the economy.

“The basic message is that the second half of this year will see some depletion in global oil inventories but this will be followed by a dismal 2020, especially the first six months of next year,” PVM analyst Tamas Varga said.

Fading worries about an imminent conflict between Western nations and Iran also weighed on oil futures.

“It seems that some of the concerns that we were close to a military conflict with Iran has eased a little bit, so that has also weighed on prices,” said Phil Flynn, an analyst at Price Futures Group in Chicago.

Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran was ready to hold talks with the United States if Washington lifted sanctions and returned to the 2015 nuclear deal it quit last year.

British Foreign Secretary Jeremy Hunt said there remained a “small window” of time to save the Iran nuclear deal as Tehran signaled it would ramp up its nuclear program.

Additional reporting by Noah Browning in London and Florence Tan; Editing by Marguerita Choy and Jan Harvey