Oil prices lose some of their early gains due to bank cuts

19 Jun 2023 , 12:38 PM

As concerns over China’s economy overshadowed OPEC+ output cuts and the seventh straight decline in the number of oil and gas rigs operating in the United States, global oil prices declined on Monday, reversing last week’s gains.

Brent crude had down 68 cents to trade at $75.93 per barrel, while WTI crude in the United States had fallen 59 cents to $71.19.

WTI increased 2.3% and Brent registered gains of 2.4% last week.

After May data last week revealed the post-COVID rebound in the second-largest economy in the world was stalling, several major banks lowered their 2023 gross domestic product growth projections for China.

According to sources cited by Reuters, China will continue to roll out stimulus support for its slowing economy this year, but worries about debt and capital flight will keep the measures focused on bolstering weak demand in the consumer and private sectors.

However, China’s refinery throughput increased in May to its second-highest total ever, supporting the advances from the previous week, and U.S. energy corporations reduced the number of active oil and natural gas refineries.

The number of oil and gas rigs, a leading predictor of future production, dropped by 8 to 687 in the week ending June 16, the lowest number since April 2022.

Oil prices are also being supported by voluntary output reductions that the Organization of the Petroleum Exporting Countries (OPEC) and its allies enacted in May as well as an additional reduction by Saudi Arabia in July.

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