TOKYO Reuters - Oil prices dropped on Tuesday, with Brent down a second straight day after manufacturing data showed slowing economic growth and U.S. production output dropped in September, raising fresh concerns about demand amid patchy recovery from coronavirus pandemic.
Brent crude was down for 43 cents, or 0.5%, at $83.90 barrel in 0132 GMT after falling 0.6% on Monday. The contract is still up nearly 7% this month.
U.S. oil fell 33 cents or 0.4%, to $82.11 a barrel, after having risen 0.2% in the previous session and nearly 10% this month.
In seven months last month, factory output in the United States increased despite a global shortage of semiconductors affecting auto production, further evidence that supply constraints are a strain on economic growth.
In China, the world's second largest economy, bottlenecks also contributed to a decrease in the growth rate to a one-year low as energy shortages and sporadic outbreaks of coronavirus hit the country.
China's daily crude oil processing rate fell to the lowest level since May of last year, again in the lowest concentration since then.
But given that temperatures are falling as the northern hemisphere winter approaches, prices of oil, coal and gas are likely to remain elevated, analysts said.
A frigid winter has the potential to send energy prices even higher, Citi Research commodities analysts said in a note, after upgrading their forecast for Brent oil for the rest of 2021 to $85 a barrel from $74 a barrel.
Colder weather has already begun to grip China with forecasts that the temperature will drop below freezing point in parts of the north, according to AccuWeather.com.
The U.S. oil output also helps keep prices low, and the industry is rising. Production in the largest shale formation in the U.S. is expected to increase further next month, according to an official report.