Oil prices fluctuated on Monday, caught between the crossfire of slowing industrial production in China, a negative signal for black gold demand, offset by strengthening expectations of US interest rate cuts, which in turn pulls prices higher.
Brent and WTI Dip Despite Positive Opening
Around 10:55 GMT, the price of Brent crude oil, the European benchmark, dipped slightly to $82.49. Its American counterpart, West Texas Intermediate (WTI), settled at $78.29. Both benchmarks had started the trading session in the green.
Weak Chinese Factory Activity and Dollar Appreciation Weigh on Prices
This renewed weakness in oil prices is attributed to the weakness of Chinese factory activity, according to Tamas Varga, an analyst at PVM Energy. Official figures released on Monday show a slowdown in China’s industrial growth in May, which could impact oil demand.
Additionally, the weakness of the euro against the dollar, partly due to political uncertainties in France, makes oil more expensive for buyers using other currencies.
Rising US Stocks and Prospects of US Rate Cuts Support Prices
The increase in US crude oil inventories, revealed in the latest report from the US Energy Information Administration (EIA), also contributes to the easing of prices.
However, US economic data, including the decrease in wholesale prices and the slowdown in the labor market, limits this decline by indicating a weakening of inflationary pressures.
Uncertainty over OPEC+ Production Policy
This data reinforces investor confidence in upcoming cuts in US interest rates, which could weaken the dollar and support oil prices.
Furthermore, statements from several ministers of OPEC+ member countries, expressing their willingness to suspend or cancel the plan to gradually lift production limits, contribute to maintaining a certain level of tension in the markets.