Oil eases on China, U.S. data, but OPEC+ cuts limit fall

Monday saw a decline in oil prices following disappointing economic statistics from the two largest users, the United States and China, although losses were contained by anticipated cuts in Saudi Arabian and Russian crude supplies.

By 1005 GMT, West Texas Intermediate crude in the United States was down 40 cents, or 0.5%, to $73.46 a barrel, while Brent crude futures were down 40 cents, or 0.5%, to $78.07 a barrel.

The U.S. CPI and China’s flood of economic data later this week may cause oil traders to exercise caution, according to CMC Markets analyst Tina Teng, who was speaking about the inflation data due out on Wednesday.

Data released on Friday in the United States showed that salary growth was accelerating despite the fewest employment additions in 2.5 years.

The data will probably maintain the U.S. Federal Reserve’s plan to hike interest rates at its meeting in July.

According to government statistics released on Monday, China’s factory-gate prices dropped at the highest rate in more than seven years in June as the recovery in the world’s second-largest economy faltered.

Teng said that when OPEC+ announced plans to further cut supplies, petroleum prices might recover.

Following commitments by the world’s two largest oil exporters, Saudi Arabia and Russia, to further tighten supply in August, oil benchmarks rose for a second straight week last week, surging more than 4% to reach their highest levels since May.

In August, Saudi Arabia will continue to cut its output by 1 million barrels per day (bpd), and Russia will reduce its oil shipments by 500,000 bpd. Russia would use the crude to make extra fuel to meet domestic demand rather than reducing supply, a government source told Reuters on Friday.

According to data from the oil analytics company Vortexa as of July 7, Saudi Arabia’s cuts are reducing its oil excess as floating storage off the Egyptian Red Sea port of Ain Sukhna is dropped by almost half to 10.5 million barrels from mid-June.