Oil prices were down nearly $2 a barrel on Monday, after weak economic data in China and expectations of another US interest rate hike offset support from OPEC+ supply cuts that took effect. this month.
The crude Brent lost just before closing $1.88, 2.3%, at $78.45 a barrel; while US West Texas Intermediate crude (WTI) was down $1.901.5%, and was quoted at 74.88 dollars a barrel.
China’s manufacturing activity unexpectedly fell in April, official data showed on Sunday, the first contraction since December in the manufacturing purchasing managers’ index.
“The market is very dependent on what happens to China, and the real-time news from the manufacturing sector turned out to be a disappointment,” said Peter McNally, an analyst at Third Bridge.
China is expected to be the main driver of oil demand growth this year, he added.
The market expects the Federal Reserve, which meets on May 2-3, to raise interest rates another 25 basis points. The US dollar rose against a basket of currencies on Monday, making oil more expensive for holders of other currencies.
“The prospect of further rate hikes to be announced by the Fed this week is expected to drive increased price volatility in the near term,” said Baden Moore, head of carbon and commodities strategy at National Australia Bank (NAB). .
Fears over the banking industry have weighed on oil in recent weeks and, in what marks the third major US bankruptcy in two months, US regulators announced Monday the intervention of First Republic Bank and a agreement reached to sell the bank to JPMorgan.
The voluntary cut in production of 1.16 million barrels per day by the members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a group known as OPEC+, which will take effect in May, had served market support.
