Key points
- WTI Crude with small gains, erasing losses earlier in the session
- China data suggests recovery remains shaky
- US oil and gas rig count drops for 7th straight week
- OPEC+ output cut deal supports market
Futures on US West Texas Intermediate Crude Oil were last edging up on Monday, erasing earlier losses, as investors continued weighing concerns over China’s post-COVID recovery against OPEC+ production cut deal.
China’s May industrial production and retail sales fell short of market expectations last week, which suggested that recovery momentum in the world’s second-largest economy was weakening.
A number of major banks revised down their 2023 GDP growth forecasts for China following the data. The financial institutions now project full-year GDP growth within the range of 5.1% to 5.7%, compared with a previously forecast range of 5.5% to 6.3%.
“(China’s) economy is navigating through powerful headwinds,” PVM oil analyst Tamas Varga was quoted as saying by Reuters.
“The property market has not healed from last year’s slump, and in May both retail sales and industrial output came in below expectation.”
China is largely anticipated to reduce its benchmark loan rates tomorrow after cutting medium-term policy loans last week in an attempt to support recovery.
On the other hand, while providing support to oil prices last week, China’s refinery throughput registered its second-highest total on record in May.
Also supporting the market, US drilling companies reduced the number of operating oil and natural gas rigs for a seventh consecutive week for the first time since mid-2020. The number of oil and gas rigs dropped by 8 to 687 in the week to June 16th, or the lowest level since April 2022.
On the supply side, Saudi Arabia, OPEC+ largest producer, vowed earlier this month to reduce its oil output to 9 million barrels per day in July from nearly 10 million in May. The news came on top of a broader OPEC+ agreement to curb supply into the next year.
As of 12:31 GMT on Monday WTI Crude Oil Futures for August delivery were edging up 0.25% to trade at $72.11 per barrel.
At the same time, Brent Oil Futures for August delivery were edging up 0.21% on the day to trade at $76.77 per barrel.
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