The price of oil took a hit on Monday after China reported a manufacturing purchasing managers’ index result below analyst estimates of 49.0 from the expectation of 50.4.
The price of Benchmark Brent Crude fell to $102 per barrel, with the soaring prices enjoyed by the commodity on the back of the Ukraine war starting to tumble as the world’s largest consumer felt the impact of Covid-19 lockdowns over summer this year.
On similar ground, mining groups have downgraded their production guidance on expectations of lower consumption across China, including FTSE 100 mining giant Rio Tinto.
“Questions over demand are outweighing serious supply constraints, suggesting industrial outlooks are bleak,” said Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.
“The biggest contributor to this recent shift is without a doubt the news that factory activity in the world’s largest oil importer, China, has fallen unexpectedly.”
“For the global consumer, this is likely to be met with relief as the cost to fill up cars recedes, but the broader theme of uncertainty sadly outweighs these short-term wins.”
