Crude oil slides more than $1 on China growth uncertainties

Crude oil slides more than $1 on China growth uncertainties

Global oil prices fell more than $1 on Monday, backing off last week’s gains, as questions over China’s economy outweighed OPEC+ output cuts and the seventh straight drop in the number of oil and gas rigs operating in the United States. Brent crude lost $1.15, or 1.5%, to trade at $75.46 a barrel by 0350 GMT, while U.S. West Texas Intermediate (WTI) crude was down $1.09, or 1.5%, to $70.69. Last week, Brent posted a gain of 2.4% and WTI rose 2.3%.

“China’s economic uncertainties may have caused the selloff after a two-day rebound in oil markets ahead of The People’s Bank of China’s (PBOC) decision on its loan prime rates (LPR) this week,” said Tina Teng, an analyst at CMC Markets. A number of major banks have cut their 2023 gross domestic product growth forecasts for China after May data last week showed the post-COVID recovery in the world’s second-largest economy was faltering.

The oil and gas rig count, an early indicator of future output, fell by 8 to 687 in the week to June 16, lowest since April 2022. Oil prices on Monday are also lower on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, or OPEC+, will struggle to get compliance with production quotas, said Edward Moya, senior analyst at OANDA.

“Rosneft is suggesting the cartel of oil producers focuses on exports and not production,” Moya said, referring to comments made by Igor Sechin, head of Russian energy major Rosneft. Speaking at an economic forum on Saturday, Sechin said it would be appropriate for OPEC+ to monitor oil export volumes as well as production quotas due to the different sizes of each country’s domestic markets. Earlier this month, OPEC+ had agreed on a new oil output deal. The group’s biggest producer Saudi Arabia also pledged to make a deep cut to its output in July.