Shares of energy companies took a hit as oil futures took a negative turn at the start of the week. This downturn came in response to China’s economic growth data falling short of expectations.
In the second quarter, China reported a year-over-year growth rate of 6.3%, which missed the projected 7.1% growth. The disappointment in China’s rebound, following the easing of Covid-19 restrictions on activity, is considered one of the contributing factors to the continued pressure on crude oil in 2023.
Additionally, natural gas prices also experienced a decline, marking the fourth consecutive day of decreases and reaching their lowest closing price since June 20.
Despite the healthy prices of oil, the shale patch is currently seeing its rigs being shed at an unprecedented rate since the peak of the Covid-19 pandemic. At the beginning of this year, there were around 800 rigs drilling for oil and gas. However, this number has now dropped to approximately 670. Interestingly, private drillers account for about 70% of this decrease, as stated by David Deckelbaum, an analyst at investment bank TD Cowen.