Oil prices fell on Monday 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 fell 17 cents, or 0.2 percent, to $76.44 a barrel by 0944 GMT, while U.S. West Texas Intermediate (WTI) crude lost 31 cents, or 0.4 percent, to $71.47.
Both contracts ended last week with gains of more than 2 percent.
“(China’s) economy is navigating through powerful headwinds,” said PVM oil analyst Tamas Varga. “The property market has not healed from last year’s slump, and in May both retail sales and industrial output came in below expectations.”
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 at 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.