U.S. West Texas Intermediate (WTI) crude futures were down 57 cents, or 1.6%, at $33.47 a barrel.
Brent crude futures fell 80 cents, or 2.19%, to $35.24.
The Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, are cutting their output by nearly 10 million barrels per day in May-June to buttress prices as measures to rein in the coronavirus pandemic have slashed fuel demand.
In the United States, where some states are opening up after lockdowns, optimism about an increase in demand has supported sentiment, but the recovery is fragile, analysts caution. The Memorial Day holiday just passed typically heralds the start of the peak U.S. demand season.
“Early estimates suggest gasoline demand is down by as much as 30% from last year as people stay close to home,” ANZ Research said in a note.
Some analysts and banks are predicting a balanced oil market as soon as June, but that could be too optimistic, according to Eurasia Group.
There is … a significant risk of repeat outbreaks and lockdowns. Even without them, some restrictions – especially on aviation – will remain in place,” it said in a note.
Still as U.S. demand picks up, however slowly, there are signs that inventories are falling. U.S. crude inventories are forecast to have fallen for a third week last week, according a Reuters poll of analysts.
Prices were also under pressure after U.S. President Donald Trump’s economic adviser, Larry Kudlow, said China was making “a big mistake” with national security legislation on Hong Kong.
Beijing’s proposed security law would reduce the territory’s separate legal status. China’s parliament is expected to approve it by Thursday.