LONDON (Reuters) – Oil prices fell sharply on Monday as weak manufacturing data from China and Europe weighed on the demand outlook as investors prepared for this week’s meeting of officials from OPEC and other major crude producers on supply.
Brent crude futures fell $3.77, or 3.6 percent, to $100.20 a barrel by 1319 GMT, after falling to a session low of $99.75.
US West Texas Intermediate crude fell $4.59, or 4.7%, to $94.03, after hitting a low of $93.49.
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Wang Tao, a Reuters technical analyst, said that a break in Brent crude prices below the $102.68 support level could lead to a drop in a range from $99.52 to $101.26.
Monday’s polls showed factories across Asia and Europe struggled in July as weak global demand and tough Chinese restrictions on the COVID-19 coronavirus slowed production, adding to concerns about economies sliding into recession. Read more
The S&P Global Final Manufacturing Purchasing Managers’ Index (PMI) for the eurozone fell to 49.8 in July from 52.1 in June, falling below the 50 mark separating growth from contraction for the first time since June 2020.
Data on Monday showed that the Caixin/Market Purchasing Managers’ Index fell to 50.4 in July from 51.7 the previous month, well below analysts’ expectations. Read more
“[China] “It was already facing a tough challenge, to put it mildly, in terms of its growth target this year, and the fact that manufacturing activity is slowing again doesn’t bode well,” said Oanda analyst Craig Erlam.
Brent and West Texas Intermediate in July ended with a second straight monthly loss for the first time since 2020 as rising inflation and higher interest rates raised fears of a recession that could erode demand for fuel.
Analysts in a Reuters poll for the first time since April cut their forecast for average Brent crude prices in 2022 to $105.75 a barrel. Their estimate of WTI fell to $101.28. Read more
The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meet on Wednesday to decide on September production.
Two of eight OPEC+ sources in a Reuters poll said a modest increase for September would be discussed at the August 3 meeting. The rest said production was likely to remain flat. Read more
US President Joe Biden visited Saudi Arabia last month.
“While President Biden’s visit to Saudi Arabia did not produce immediate oil results, we believe that the kingdom will reciprocate by continuing to gradually increase production,” Helima Croft, an analyst at RBC Capital, said in a note.
While OPEC+ aims to completely eliminate record production cuts by this month, data showed that the organization as of June is still about three million barrels per day below its production target as some producing countries struggle to get wells back on line. Read more
Kuwaiti newspaper Al-Rai reported that the new Secretary-General of the group, Haitham Al-Ghais, reiterated on Sunday that Russia’s membership in OPEC + is necessary for the success of the production agreement. Read more
Among the factors that affected prices was the rise in Libyan oil production, which amounted to 1.2 million barrels per day, up from 800,000 barrels per day on July 22, after the blockade of several oil installations was lifted.
US oil production also continued to rise. Data from Baker Hughes showed that the number of rigs in the country rose by 11 in July, a record for the 23rd consecutive month.
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Narrated by Ahmed Ghaddar. Additional reporting by Florence Tan in Singapore; Editing by David Goodman and Jason Neely
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