Oil prices fell in thin early Asian trade on Tuesday as the market digests weak economic data from China and expectations of another U.S. interest rate hike.
U.S. West Texas Intermediate (WTI) crude fell $1.23, or 1.62% to $75.54. Both benchmarks fell by more than $1 last session.
China’s manufacturing activity unexpectedly fell in April, official data showed on Sunday, the first contraction since December in the manufacturing purchasing managers’ index.
China’s industrial and economic recovery from the coronavirus pandemic was expected to boost demand this year.
Meanwhile, the U.S. Federal Reserve, which meets on Tuesday and Wednesday, is expected to increase interest rates by another 25 basis points. Interest rate hikes often reduce demand.
Banking fears have also weighed on oil in recent weeks and in what is the third major U.S. institution to fail in two months, U.S. regulators seized First Republic Bank over the weekend ahead of a deal in which JPMorgan bought most of its assets.
A Monday poll suggesting that U.S. crude oil stockpiles are expected to have fallen for a third consecutive week provided some support to the market.
The poll was conducted ahead of reports from the American Petroleum Institute, an industry group, due at 4:30 p.m. EDT (2030 GMT) on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, due at 10:30 a.m. (1430 GMT) on Wednesday.