On Monday morning, China's industrial production figures for the month of July rose 3.8%, well below economists' expectations of 4.5%. China has a goal of reaching 5.5% economic growth this year, but with the first half of the year coming in far below that, the country would have to do more than 5.5% to reach that goal. Officials in China have walked back on that rhetoric recently, and the situation doesn't look like it will improve very much, as long as officials continue to implement the country's "zero COVID" policies.
In addition, soft manufacturing data came in from the New York Empire State Manufacturing Index, which cratered by 42.4 percentage points to a negative 31.3 reading, signaling contraction in the region's manufacturing industry.
Obviously, soft economic and manufacturing data is seen as a headwind for oil demand. It looks like the tighter financial conditions implemented by the Fed from earlier this year are beginning to bite into economic growth.
At the same time, the status of the Iran nuclear deal is progressing, with the European Union negotiators asking for an answer on its draft of the deal by tonight. While the timeline for a deal has repeatedly been pushed back, it's possible a deal could come through in the near term -- although no one really knows if it will happen, with both sides playing it close to the vest.
In any case, weakening growth in the world's two largest economies along with the prospect of more Iranian barrels coming onto the world markets were enough to send oil prices retreating on Monday, down some 4% to $88 per barrel as of this writing.
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