Oil prices dipped on Monday, after a five-day rally, as investors focused on slowing economic activity in China, the world’s largest oil importer, raising fears about a worldwide recession and declining global fuel consumption.
Brent oil futures for December delivery fell as much as 1.1% and were down 40 cents, or 0.4%, at $97.52 a barrel at 12:40 GMT.
West Texas Intermediate crude for November delivery fell as high as 1.1% to $92.29, a drop of 35 cents, or 0.4%.
Services activity in China during September contracted for the first time in four months as COVID-19 restrictions hit demand and business confidence, data showed on Saturday.
The slowdown in China, the world’s second-largest oil consumer behind the United States, adds to growing concerns over a possible global recession triggered by numerous central banks raising interest rates to combat high inflation.
Innes was referring to the possibility of additional releases from the U.S. Strategic Petroleum Reserve (SPR) next month in response to the decision last week by the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, to lower their output target by 2 million barrels per day.
Brent and WTI posted their biggest weekly percentage gains since March after the reduction was announced.
The OPEC+ cuts, which come ahead of a European Union embargo on Russian oil, will squeeze supply in an already tight market. EU sanctions on Russian crude and oil products will take effect in December and February respectively.
“OPEC+’s decision … will have a muted impact on the oil supply market as actual output cuts will be smaller,” Fitch Ratings said on Monday, adding that the group collectively was already producing less than its previous quotas.
“A recessionary economic outlook will lead to lower oil demand,” it added.