Oil prices fell on Monday as concerns about China’s economy overshadowed OPEC+ supply cutbacks and the sixth consecutive decline in the number of oil and gas rigs working in the US.
Brent crude slid 17 cents, or 0.2%, to $76.44 a barrel by 1319 GMT, while WTI crude in the United States fell 27 cents, or 0.4%, to $71.51.
Last week, both futures finished with gains of more than 2%.
“(China’s) economy is facing significant headwinds,” said PVM oil analyst Tamas Varga. “The housing market has yet to recover from last year’s recession, and both retail sales and industrial output fell short of expectations in May.”
A number of large banks have cut their forecasts for China’s 2023 growth in gross domestic product after May data last week showed the post-COVID recovery in the world’s second-largest economy was faltering.
China is widely expected to cut its benchmark loan rates on Tuesday after a similar reduction in medium-term policy loans last week to shore up a shaky economic recovery.
Sources have told Reuters that China will roll out more stimulus for its slowing economy this year, but concern over debt and capital flight will keep the measures targeted on the consumer and private sectors.
However, China’s refinery throughput rose in May to its second-highest total on record, helping to boost last week’s gains, and U.S. energy firms cut the number of working oil and natural gas rigs for a seventh week in a row for the first time since July 2020.
The oil and gas rig count, an early indicator of future output, fell by eight to 687 in the week to June 16 for the lowest total since April 2022. , , .
Rising Iranian oil exports also weighed on prices. Iran’s crude exports and oil output have hit record highs in 2023 despite U.S. sanctions, according to consultants, shipping data and a source close to the matter, adding to global supply when other producers are limiting output.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia this month agreed on a new oil output deal and the group’s biggest producer, Saudi Arabia, also pledged to make a deep cut to its output in July.
