TOKYO, June 19 (Portal) – Global oil prices fell more than $1 on Monday, paring last week’s gains as questions about the Chinese economy outweighed OPEC+ output cuts and the seventh decline consecutive states in the number of oil and gas rigs operated in the United States.
Brent crude is down $1.15 or 1.5% to trade at $75.46 a barrel by 03:50 GMT, while US crude West Texas Intermediate (WTI) is down $1.09 or 1.5%, to $70.69.
Last week, Brent was up 2.4% and WTI was up 2.3%.
“China’s economic uncertainties may have been the trigger for the sell-off after oil markets rallied for two days before the People’s Bank of China (PBOC) set its lending rate (LPR) this week,” said Tina Teng, an analyst at CMC Markets.
A number of big banks have lowered their GDP growth forecasts for China in 2023 after data in May last week showed the recovery from the COVID crisis in the world’s second-biggest economy was faltering.
The PBOC is widely expected to cut interest rates on intermediate-term policies on Tuesday, after making a similar cut in intermediate-term policy lending last week to shore up a shaky economic recovery.
Sources have told Portal that China will introduce more stimulus measures for its slowing economy this year, but worries about debt and capital flight will continue to aim measures to prop up weak consumer and private sector demand.
Still, China refinery throughput rose in May to the second-highest total throughput on record, helping to add to last week’s gains, and US energy companies reduced oil in operation for the seventh straight week for the first time since and natural gas rigs July 2020.
The oil and gas rig count, an early predictor of future production, fell 8 to 687 in the week ended June 16, the lowest since April 2022.
Oil prices also fell on Monday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, or OPEC+, are expected to struggle to meet production quotas, said Edward Moya, senior analyst at OANDA.
“Rosneft suggests that the oil producers’ cartel is focused on exports and not production,” Moya said, citing comments from Igor Sechin, head of Russian energy giant Rosneft (ROSN.MM).
Speaking at an economic forum on Saturday, Sechin said that due to the different sizes of each country’s domestic markets, it was appropriate that OPEC+ would monitor both oil export volumes and production quotas.
Earlier this month, OPEC+ agreed on a new oil production deal. The group’s largest producer, Saudi Arabia, also promised a significant cut in its output in July.
Reporting by Katya Golubkova in Tokyo and Emily Chow in Singapore; Edited by Tom Hogue
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