Oil dips on Chinese and US data, but OPEC+ cuts limit fall

LONDON: Oil prices dipped on Monday after weak economic data from top consumers the United States and China, though expected crude supply cuts from Saudi Arabia and Russia limited losses.

Brent crude futures fell 19 cents, or 0.2%, to $78.28 a barrel by 1416 GMT.

U.S. West Texas Intermediate crude was down 24 cents, or 0.3%, at $73.62.

“Oil traders may be cautious ahead of the U.S. CPI and China’s slew of economic data later this week,” CMC Markets analyst Tina Teng said of inflation data due on Wednesday.

U.S. data last Friday pointed to the smallest job gains in two-and-a-half years but strong wage growth. The figures strengthen the likelihood of the U.S. Federal Reserve raising interest rates at its July meeting.

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

However, crude prices could rebound after producer group OPEC+ announced plans to reduce supply further, Teng added.

Oil prices up 3pc to 9-week high on supply concerns

Oil benchmarks gained more than 4% last week to touch their highest since May, rising for a second straight week after the world’s biggest oil exporters, Saudi Arabia and Russia, pledged to deepen supply cuts in August.

Saudi Arabia will extend its 1 million barrel per day (bpd) output cut into August and Russia will cut crude exports by 500,000 bpd. Instead of cutting output, Russia will be using the crude to produce more fuel to meet domestic demand, a government source told Reuters on Friday.

“The beginning of July and the implementation of a Saudi production cut help trigger short covering in WTI and fresh buying of Brent,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Money managers stepped up net long positions in oil futures and options contracts in the latest weekly data.

“Overall, the combined net long increased by 49,000 contracts to 280,000, still within the range that has prevailed during two months of range-bound trading,” Hansen added.