Oil prices slumped on Monday, driven by bearish economic data from China and Japan, while investors focus on the OPEC+ meeting on Wednesday.
International benchmark Brent crude was trading at $103.36 per barrel at 09.47 a.m. local time (0647 GMT) for a 0.58% decrease after the previous session closed at $103.97 a barrel.
American benchmark West Texas Intermediate (WTI) was at $97.56 per barrel at the same time for a 1.07% loss after the previous session closed at $98.62 a barrel.
China’s manufacturing activity growth in July fell below expectations, with the Manufacturing Purchasing Manager’s Index (PMI) dropping to 49 from June’s 50.2, and relative to the market expectation of 50.4. This was the slowest pace since February 2020, the month before the start of the coronavirus pandemic when it came in at 35.7, data from the National Bureau of Statistics (NBS) showed on Sunday.
Manufacturing PMI measures the activity level in the manufacturing sector, which can be a leading indicator of its overall performance. A reading above 50 shows expansion in the sector and below 50 indicates contraction.
In conjunction with negative economic data in China, the world's second-largest oil consumer, its strict “Zero Covid” policy is stoking demand concerns. Almost one million people were placed under lockdown on Friday in a suburb of Wuhan, China's major metropolis where the coronavirus was first discovered.
In Japan, although manufacturing activity rose in July, it was at the slowest rate in the last ten months, as rising costs and supply interruptions hampered output and new orders.
Meanwhile, investors are awaiting the upcoming meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+) on Wednesday, when the group will decide their output schedule for September.
The meeting follows US President Joe Biden's visit to Saudi Arabia last month. On his visit to Saudi Arabia, Biden held hopes of more oil output amid rising energy prices and inflation rates, but Saudi Crown Prince Mohamed bin Salman said that the kingdom would seek a less-than-expected increase in its oil production from around 11 million barrels per day (bpd) to 13 million bpd.
By Sibel Morrow