Oil prices dropped more than a dollar a barrel on Monday after weak economic data from China and expectations of another US interest rate hike outweighed support from OPEC+ supply cuts that take effect this month.
Brent crude fell $1.27, or 1.6%, to $79.06 a barrel by 1521 GMT. US West Texas Intermediate (WTI) crude slid $1.39, or 1.8%, to trade at $75.39.
China’s manufacturing activity unexpectedly declined in April, official data showed on Sunday, the first contraction since December in the manufacturing purchasing managers’ index.
The US Federal Reserve, which meets on May 2-3, is expected to increase interest rates by another 25 basis points. The US dollar rose against a basket of currencies, making oil more expensive for other currency holders.
“We continue to be at the mercy of sentiment surrounding a Chinese recovery or the lack thereof, while the backdrop in the US of ongoing monetary tightening leaves us in the ‘bad is good’ realm when it comes to economic data or news flow,” said Kpler analyst Matt Smith.
Banking fears have weighed on oil in recent weeks and in what is the third major US institution to fail in two months, US regulators said First Republic Bank has been seized and reported a deal to sell the bank to JPMorgan.
Published in The Express Tribune, May 2nd, 2023.
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