Oil prices extended last week’s losses on Monday on concerns that demand in China will slow, but geopolitical risks surrounding the Middle East and Russia limited the decline.
Brent futures were down 55 cents, or 0.7%, at $81.53 a barrel at 04:05 GMT, while WTI was down 57 cents, or 0.7%, at $77.44.
Both indicators fell last week; Brent fell 1.8% and WTI fell 2.5%, driven by downward Chinese data indicating weakening demand in the world’s number one importer.
Concerns about weak demand in China outweighed the extension of OPEC+ supply cuts. Mixed signals from US employment data also led some traders to adjust their positions.
However, losses will probably remain limited due to increasing geopolitical risks, the failure to reach a ceasefire in the Hamas-Israel war despite the month of Ramadan, and the possibility of the Russia/Ukraine war spreading to neighboring countries.
Last week’s data showed that employment growth in the US accelerated in February, but the increase in the unemployment rate and the slowdown in wage increases kept the Fed’s June interest rate cut expectation on the table.
China last week set an economic growth target of around 5% for 2024, which many analysts called ambitious with the current stimulus.
Data on Thursday showed that China’s crude oil imports increased in the first two months of the year compared to the same period in 2023, but were weaker than in previous months, continuing the softening trend in the purchases of the world’s largest buyer.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed earlier this month to extend voluntary oil production cuts of 2.2 million barrels per day into the second quarter. This could tighten the market as demand recovers from the seasonal lull.
Hamas on Sunday accused Israel of delaying ceasefire talks and rejecting Hamas’ demand to end the war in Gaza. However, a solution is still being sought through negotiation.
Tensions are also escalating between Russia and its neighbors, raising fears about the potential for escalation of conflict outside Ukraine.
Moldovan’s president signed a defense cooperation agreement with France on Thursday, saying Russia had renewed efforts to destabilize his country and would continue unless President Vladimir Putin was stopped in Ukraine.
