Brent crude futures fell 20 cents to $75.21 a barrel by 0044 GMT, after previously finishing up 0.8% on Friday.
Furthermore, West Texas Intermediate crude in the United States was trading at $70.41 per barrel, down 23 cents from the previous session’s close of 1.1% higher.
By the end of June, Brent fell for the fourth straight quarter, while WTI ragged a second quarterly drop as the U.S. and China, the world’s top two economies, lost pace in the second quarter.
Fears of a further downturn impacting fuel demand intensified after data on Friday showed US inflation still exceeding the central bank’s 2% target, fueling predictions of another rate hike.
Analysts at National Australia Bank said in a note that “Hawkish commentary on rates continues to raise concerns of the demand outlook weighing on prices.”
Higher interest rates may strengthen the dollar, making commodities more expensive for holders of foreign currencies and reducing oil demand.
Later on Monday, Caixin, a media company, is set to release its monthly private sector manufacturing PMI survey for China for the previous month, which is anticipated to drop slightly from May.
In a June Reuters survey, economists and experts reduced their Brent price expectations for 2023 to an average of $83.03 per barrel.
Still, some analysts expect supplies to strangle and push prices higher in the second half after Saudi Arabia, the top exporter, pledged an extra 1 million barrels per day output cut for this month, while the U.S. is gradually filling up its Strategic Petroleum Reserve.
“We continue to see upside from current levels as the market is expected to move into deficit in the 2H of 2023,” analysts at National Australia Bank said.
However, the latest Reuters survey showed OPEC oil output had declined slightly in the previous month as increases in Iraq and Nigeria limited the impact of downsizing by others.
Furthermore, investors are looking for supply clues at a summit sponsored by the Organisation of Petroleum Exporting Countries later this week.
According to data by Baker Hughes, in the previous week, U.S. oil rigs fell by one to 545, their lowest level since April 2022, while gas rigs declined six to 124, their lowest since February 2022.
The U.S. Energy Information Administration said on Friday that U.S. crude output fell in April to 12.615 million barrels per day, which is estimated to be the lowest since February.
- Published By Team Genuine Reporter