Global oil prices fell more than 1% on Monday and retracted last week’s gains as questions about the Chinese economy outweighed OPEC+ production cuts and the seventh consecutive decline in the number of oil and gas rigs operating in the US.
Brent crude is down 78 cents, or 1%, at 0655 GMT to $75.83 a barrel, after falling as much as $1.27 to $75.34. West Texas Intermediate (WTI) crude fell 76 cents, or 1.1%, to $71.02, after falling $1.15 to $70.63.
Last week, Brent rose 2.4% and WTI 2.3%.
Economic uncertainties in China may have led to selling off after a two-day recovery in oil markets ahead of the People’s Bank of China (PBOC) decision on loan rates this week.
Last week, some major banks lowered their 2023 gross domestic product growth forecasts for China after May data showed the post-COVID recovery in the world’s second-largest economy faltering.
China is expected to cut benchmark loan prime rates on Tuesday after a similar cut in medium-term policy loans last week to support a shaky economic recovery.
Sources said China will offer more stimulus support for its slowing economy this year, but concerns over debt and capital flight will keep measures to support weak consumer and private sector demand.
Still, China’s refinery output rose to its second-highest total on record in May, helping to boost last week’s gains. But US energy firms reduced the number of oil and gas rigs operating for the seventh week in a row for the first time since July 2020.
The number of oil and gas rigs, an early indicator of future production, fell to 687, 8 drops in the week through June 16, the lowest level since April 2022.
Oil prices also fell on Monday on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will struggle to adapt to production quotas.
According to the statements made by the head of Russian energy giant Rosneft, Igor Sechin, Rosneft, the cartel of oil producers focused on exports, not production.
Speaking at an economic forum on Saturday, Sechin said it would be appropriate for OPEC+ to monitor oil export volumes and production quotas, given the different sizes of each country’s domestic markets.
Earlier this month, OPEC+ agreed on a new oil production deal. The group’s largest producer, Saudi Arabia, also promised a deep cut in production in July.
