Oil prices extended last week’s losses on Monday on concern about slow demand in China, although lingering geopolitical risk surrounding the Middle East and Russia limited the decline.
Brent futures fell 55 cents, or 0.7%, to $81.53 a barrel at 0405 GMT, while U.S. West Texas Intermediate (WTI) dropped 57 cents, or 0.7%, to $77.44.
Both benchmarks fell last week, with Brent down 1.8% and WTI 2.5% lower on bearish Chinese data which pointed at softer demand in world’s no. 1 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.
Data last week showed U.S. job growth accelerated in February, but a rise in the unemployment rate and moderation in wage gains kept an anticipated June interest rate cut from the Federal Reserve on the table.
China last week set an economic growth target for 2024 of around 5%, which many analysts called ambitious without much more stimulus.
China’s imports of crude oil rose in the first two months of the year compared with the same period in 2023, but they were weaker than the preceding months, data showed on Thursday, continuing a trend of softening purchases by the world’s biggest buyer.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed early 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.
In the Middle East, Hamas chief Ismail Haniyeh blamed Israel on Sunday for stalling ceasefire talks and rejecting Hamas’ demand to end the war in Gaza, but said the group was still seeking a negotiated solution.
Tension is also escalating in Russia and its neighbours, raising fear about a potential escalation in conflict outside of Ukraine, NS Trading’s Kikukawa said.
Moldova’s president on Thursday signed a defence cooperation accord with France, saying Russia was renewing efforts to destabilise her country and that if President Vladimir Putin was not stopped in Ukraine he would keep going.
(Reporting by Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi; Editing by Christopher Cushing and Lincoln Feast.)