Oil prices decline on global economic slowdown and weak demand concerns over US rate hikes
Oil prices fell on Monday as the global economic slowdown and concerns over possible further rate hikes by the US Federal Reserve weighed on prices and the OPEC+ cuts offset forecasts.
Brent crude futures were down 0.4%, or 27 cents, to $75.14 a barrel at 0630 GMT after rising 0.8% on Friday. West Texas Intermediate crude became $70.36 a barrel, down 0.4%, or 28 cents, after closing the previous session up 1.1%.
Brent fell for the fourth consecutive quarter at the end of June, while WTI recorded its second quarterly decline as the world's two largest economies, the US and China, lost pace in the second quarter.
Fears that a further slowdown will hurt fuel demand have risen after data on Friday showed US inflation still surpassing the central bank's 2% target and revived expectations that it will raise interest rates again.
The hawkish comments on the rates continue to raise concerns about the demand outlook weighing on prices.
Higher interest rates can strengthen the dollar, making commodities more expensive for the other currencies, while also reducing demand for oil.
Factory activity growth in China, the world's largest importer of crude oil, also slowed in June as confidence and employment cooled with the stagnant market conditions, according to a survey.
Still, some analysts expect supply to tighten and prices to rise in the second half after the biggest exporter Saudi Arabia promised an extra 1 million barrels per day cut in July and the US gradually renewed its Strategic Petroleum Reserve. The US purchased 3.2 million barrels of oil for SPR
Multiple output cuts from OPEC+ have kept oil prices above key levels, and this could cause the cartel to make further production cuts to maintain the stability of the crude oil market.
However, OPEC oil production fell only slightly in June as increases in Iraq and Nigeria limited the impact of cuts made by others.
Investors are looking forward to a conference hosted by the Organization of the Petroleum Exporting Countries (OPEC) this week for supply clues.
U.S. oil rigs dropped last week to 545, their lowest since April 2022, while gas rigs dropped six to 124, their lowest level since February 2022, according to Baker Hughes data.
US crude oil production fell to 12,615 million barrels per day in April, the lowest level since February, the US Energy Information Administration (EIA) said on Friday.
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