Oil eases ahead of China, US data, but OPEC+ cuts limits slide

Singapore, July 10 (BNA): Oil prices fell in Asian trading today, Monday, as investors moved cautiously ahead of the release of new economic data from major consumers in the United States and China this week, although expected cuts to crude supplies from Saudi Arabia and Russia limited losses.

Brent crude futures fell 55 cents, or 0.7%, to $77.92 a barrel by 0630 GMT, and US West Texas Intermediate crude was $73.31 a barrel, also down 55 cents, or 0.7%, Reuters reported.

“Oil traders may be cautious ahead of the US CPI and China’s big economic data later this week,” said CMC Markets analyst Tina Ting.

It added that crude oil prices may rebound after OPEC+ announced plans to further cut supply.

China’s factory gate prices fell at the fastest pace in more than seven years in June, government data showed on Monday, as the momentum of economic recovery in the world’s second-largest economy slowed.

Benchmark oil prices rose more than 4 percent last week to their highest level since May, rising for the second week in a row after Saudi Arabia and Russia, the world’s top oil exporters, pledged to deepen supply cuts in August.

“The presence of an economic slowdown in China adds to the uncertainty in the oil market,” said Mukesh Sahdev, Head of Refining, Marketing and Oil Trading at Rystad Energy.

“Market instability is fueled by the ongoing conflict between concerns about demand control by Western economies and supply control strategies employed by OPEC, which affects the delicate balance in the oil market.”

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Saudi Arabia will extend its production cut of 1 million barrels per day in August, and Russia will cut crude exports by 500,000 barrels per day. A government source told Reuters on Friday that Russia will use crude to produce more fuel to meet domestic demand rather than cut production.

The Saudi cuts are easing an oil glut as floating stocks off Egypt’s Red Sea port of Ain Sukhna have halved to 10.5 million barrels since mid-June, according to data from oil analytics firm Vortexa as of July 7.

Non-OPEC+ supplies are keeping pace with global demand, JPMorgan analysts said in a note, adding that OPEC+ needs to deepen its cuts by another 700,000 barrels in the second half of the year on top of the announced cuts and extend them into 2024.

In the US, data on Friday showed that wage growth remains strong and a slight decline in the unemployment rate this week is likely to keep the Federal Reserve on track to raise interest rates at the upcoming July meeting.

The US Commodity Futures Trading Commission (CFTC) said on Friday that money managers net-lifted their US crude futures and options contracts in the week ending July 3.

Tony Sycamore, an analyst with IG, said that a sustained breakout of WTI prices above $75 would likely lead to a test of the benchmark high of the $64-$84 range for eight months.

The number of US oil rigs fell by five to 540 last week, the lowest level since April 2022, according to a Baker Hughes report on Friday.

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