SINGAPORE: Oil prices slipped on Monday on weak China data, but held on to most of last week’s gains, as investors awaited US-China trade talks in London later in the day, hoping a deal could boost the global economic outlook and fuel demand.
Brent crude futures slipped 18 cents, or 0.27%, to $66.29 a barrel by 0644 GMT. US West Texas Intermediate crude fell 15 cents, or 0.23%, to $64.43.
China’s exports growth slowed to a three-month low in May as US tariffs slammed shipments, data showed, while factory-gate deflation deepened to its worst in two years, heaping pressure on the world’s second-largest economy both at home and abroad.
The data also showed that China’s crude oil imports declined in May to the lowest daily rate in four months, as state-owned and independent refiners underwent widespread planned maintenance.
“Bad timing for crude oil, which was testing the top of the range and knocking on the door of a technical break above $65,” said IG market analyst Tony Sycamore, referring to WTI prices.
“That said I would expect the reaction to be less extreme than usual, given US and China trade talks later today.”
Brent had advanced 4%, and WTI gained 6.2%, last week for their first weekly gain in three, as the prospect of a US-China trade deal boosted some investors’ risk appetite.
A US jobs report showing unemployment held steady in May appeared to increase the odds of a Federal Reserve interest rate cut, further supporting gains last week.
The prospect of a China-US trade deal that could support economic growth and increase demand for oil outweighed worries about increased OPEC+ supply after the group announced on May 31 another big output hike for July.
HSBC expects OPEC+ to accelerate supply hikes in August and September, which are likely to raise downside risks to the bank’s $65-per-barrel Brent forecast from the fourth quarter of 2025, it said in a research note on Friday.
Capital Economics researchers said they believe the “new faster pace of (OPEC+) production rises is here to stay”.
WTI’s discount to Brent has also been narrowing on a combination of increased OPEC+ output, modest US crude oil supply growth and the potential for output declines next year, ING analysts led by Warren Patterson said in a note.
The US benchmark strengthened on supply concerns after wildfires disrupted production in Canada and robust US fuel demand during the summer driving season.
