ISLAMABAD
Oil prices came down on Monday paring off last week’s gains, as concerns over China’s economy outweighed Opec+ output cuts and the seventh straight drop in the number of oil and gas rigs operating in the United States.
As of 1110 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $0.19 (-0.25 percent) to reach $76.42 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $0.27 (-0.38 percent) to $71.51 a barrel. Last week, Brent posted a gain of 2.43 percent and WTI rose 2.29 percent.
The price of Russian Sokol jumped by $0.02 (+0.03 percent) to $66.72. Arab Light prices witnessed an increase of $0.13 (+0.17 percent) to reach $78.17 a barrel. Similarly, the price for Opec Basket went down by $0.64 (-0.86 percent) to $74.20. The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
A number of major banks have cut their 2023 gross domestic product growth forecasts for China after May data last week showed the post-Covid recovery in the world’s second-largest economy was faltering. China will roll out more stimulus support for its slowing economy this year, but concerns over debt and capital flight will keep the measures targeted at shoring up weak demand in the consumer and private sectors.
Still, China’s refinery throughput rose in May to its second-highest total on record, helping to boost last week’s gains, and US energy firms cut the number of working oil and natural gas rigs for a seventh week in a row for the first time since July 2020.
Meanwhile, more investment banks revised their predictions for oil prices later in the year, with Goldman Sachs, Morgan Stanley, and Bank of America all cutting their predictions for oil prices citing Russian export resilience and uneven Chinese demand recovery.
Higher interest rates rise borrowing costs and generally discourage oil demand growth. A cheaper US potentially improves the outlook for oil demand as a cheaper dollar makes for cheaper oil to buyers in non-dollar currencies.
