Brent futures dropped by 55 cents, or 0.7%, to $81.53 per barrel, while U.S. West Texas Intermediate fell by 57 cents, or 0.7%, to $77.44
Oil prices continued to decline on Monday due to concerns about sluggish demand in China.
However, the decline was limited by ongoing geopolitical risks in the Middle East and Russia. At 0405 GMT, Brent futures dropped by 55 cents, or 0.7%, to $81.53 per barrel, while U.S. West Texas Intermediate (WTI) fell by 57 cents, or 0.7%, to $77.44.
Last week, both benchmarks experienced losses, with Brent down 1.8% and WTI down 2.5%, primarily driven by bearish Chinese data indicating weaker demand from the world’s largest crude importer.
Worries over weak demand in China outweighed the extension of supply cuts by OPEC+, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that mixed signs from U.S. jobs data prompted some traders to adjust positions.
Still, the losses will be capped by increased geopolitical risk, with the possibility that a ceasefire may not be reached in the Hamas-Israel war and that conflict may expand in Russia and its neighbours, he said.
Despite accelerated job growth in the U.S. in February, the rise in the unemployment rate and moderation in wage gains kept the possibility of a June interest rate cut from the Federal Reserve on the table.
China’s recent announcement of an economic growth target of around 5% for 2024 was seen as ambitious by many analysts, especially without significant additional stimulus. Although China’s crude oil imports increased in the first two months of this year compared to the same period in 2023, they were weaker than previous months, indicating a trend of softening purchases by the world’s largest buyer.
On the supply side, OPEC and its allies, collectively known as OPEC+, agreed earlier this month to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter.
With OPEC+ extending its voluntary production cut agreement until the end of second quarter, this could tighten the market as demand recovers from its seasonal lull, analysts at ANZ Research wrote in a note.
