Oil prices flat as rates anxiety, China gloom offset tighter supply

OIL prices were steady on Monday with Brent staying above US$80 a barrel, as investors balanced tightening supply driven by Opec+ cuts with nagging concerns about global demand growth amid high interest rates.

Brent crude dipped 8 cents to US$84.72 a barrel by 0033 GMT while US West Texas Intermediate crude was at US$81.28 a barrel, up 3 cents. The September WTI contract expires on Tuesday and the more active October contract eased 3 cents to US$80.63 a barrel.

Both front-month benchmark prices snapped a 7-week winning streak last week to post a weekly loss of about 2 per cent after the US dollar strengthened on the possibility that interest rates could remain higher for longer while China’s worsening property crisis added to concerns about its sluggish economic growth and oil demand.

“A risk-off tone across markets weighed on sentiment, triggered by concerns of further monetary tightening amid strong growth and entrenched inflation,” ANZ analysts said in a note.

China’s renewed economic weakness has raised questions over whether its oil demand can remain resilient, they said.

The world’s top crude importer is drawing on record inventories amassed earlier this year as refiners scale back purchases after supply cuts by the Organization of the Petroleum Exporting Countries (Opec) and allies led by Russia, known as Opec+, drove global prices above US$80 a barrel.

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In July, Saudi Arabia’s shipments to China fell 31 per cent from June while Russia, with its discounted crude, remained the Asian giant’s largest supplier, Chinese customs data showed.

Meanwhile, Chinese refiners ramped up refined products exports in July, drawn by strong export margins.

In the US, the number of operating oil rigs, an early indicator of future output, fell by five to 520 last week, their lowest since March 2022, according to Baker Hughes’ report on Friday. REUTERS