Oil futures settled lower on Monday, extending their loss from last week as concerns over China’s economy contributed to the first weekly price loss in eight weeks.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
-1.39% CLU23,
-0.58%
fell 53 cents, or nearly 0.7%, to settle at $80.72 a barrel on the New York Mercantile Exchange after losing 2.3% last week. -
October Brent crude
BRN00,
-1.31% BRNV23,
-1.31% ,
the global benchmark, declined by 34 cents, or 0.4%, at $84.46 a barrel on ICE Futures Europe. -
Back on Nymex, September gasoline
RBU23,
-1.76%
lost 1.8% to $2.77 a gallon, the lowest front-month finish since Aug. 3, according to Dow Jones Market Data. September heating oil
HOU23,
-0.55%
shed 1.4% to $3.12 a gallon. -
September natural gas
NGU23,
-1.05%
added 3.2% to $2.63 per million British thermal units.
Market drivers
WTI and Brent last week fell more than 2%, for the first weekly declines since June. Analysts blamed worries over China’s economy, amplified by the country’s property-sector woes, for part of the decline. An accompanying rise by the U.S. dollar was also seen acting as a headwind for crude and other commodities.
“Overall demand and prices for crude oil are being constrained by slowing global growth and a global manufacturing recession,” Jason Schenker, president of Prestige Economics, said in emailed commentary.
Meanwhile, a consistent run of strong U.S. economic data has raised fears the Federal Reserve may need to push interest rates higher than previously expected and hold them there for longer than previously anticipated, while weekly government data last week showed a pullback in consumer fuel demand and a post-pandemic high in U.S. crude production, analysts at Sevens Report Research said in a note.
“News flow will have to improve substantially for oil to resume the summer rally as hopes for a soft landing have been seen fading while concerns about the global economy are on the rise,” they wrote.
Still, a forecast from the Organization of the Petroleum Exporting Countries reveals an anticipated growth of over 2% in global crude-oil demand for both 2023 and 2024, said Schenker. On the inventory side, the Department of Energy reports that both crude oil and total inventories, which include the Strategic Petroleum Reserve, have decreased on a year-on-year basis, he said.
Crude has rallied this summer in a move attributed in large part to tightening supplies. Saudi Arabia implemented a production cut of 1 million barrels a day in July and has said it would be extended through September.
Meanwhile, natural-gas futures rallied Monday, ending the session with a gain of more than 3%.
“Warmer-than-average short-term temperature outlooks foreshadow a rapidly falling storage surplus,” said Victoria Dircksen, commodity analyst at Schneider Electric, in a daily note.
In addition, the National Hurricane Center is tracking a disturbance in the Gulf of Mexico with an 80% chance of cyclone formation within the next 48 hours, she said. Storms in the Atlantic have the potential to disrupt energy production in the region.
Read: Hurricane season threatens to stir volatility for oil and gas prices
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