Oil slipped on Tuesday as investors absorbed a bleak outlook for fuel demand with data pointing to a global manufacturing downturn just as OPEC+ producers meet this week to decide whether to increase supply.
Surveys showed on Monday that factories across the United States, Europe and Asia struggled for momentum in July as flagging global demand and China’s strict COVID-19 restrictions slowed production.
“These readings did nothing to mitigate the fears of recession,” said Tamas Varga at oil broker PVM.
Brent crude was down US$1.40, or 1.4%, to US$98.63 a barrel by 0817 GMT, while U.S. West Texas Intermediate crude fell US$1.00, or 1.1%, to US$92.89.
Oil soared earlier in 2022, with Brent in March coming close to its all time high of US$147 a barrel after Russia’s invasion of Ukraine added to supply concerns. Concerns about slowing growth have since eclipsed tight supply.
“The upward momentum of oil prices has been gradually fading,” analysts at Haitong Futures said. “Once the supply and demand situation shows any sign of further deterioration, oil is likely to lead the decline among commodities.”
In focus this week is a meeting on Wednesday between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, to decide whether to increase output in September.
Two of eight OPEC+ sources told Reuters that a modest increase for September would be discussed, while the rest said producers are likely to hold output steady.
Also coming into view is the latest weekly reading on U.S. inventories. Analysts expect a decline in crude and gasoline stocks. This week’s first report is due at 2030 GMT from the American Petroleum Institute.