Oil futures fell as the lingering effects of the decision by the Organization of Petroleum Producing Countries to keep its output ceiling unchanged and signs of weaker Chinese demand pushed the prices of the major benchmarks down.
Light sweet crude for July demand traded down 38 cents or 0.6% lower at $58.77 a barrel on the New York Mercantile Exchange.
Brent futures, the global benchmark, most recently fell 63 cents or 1% at $62.84 a barrel on the London based ICE futures Exchange.
“OPEC ministers last week appeared to be striking a note of cautious optimism that their decision to let market forces dictate supply and demand is working out pretty well,” Barclays’ analysts told the Wall Street Journal.
“In fact, the bulk of incoming oil supply and demand data fail to support that view…The oil market surplus, although shrinking in H2 [second half of 2015], is set to persist for the whole year.”
Data from the world’s biggest importer of crude showed that crude imports fell by 11% on a year on year basis triggering concerns of tepid global demand amidst a glut.
According to the data, refineries in Asia’s biggest economy used oil from stockpile hence the drag on imports while most processing plants also were offline for routine maintenance impacting on demand.
Crude imports fell 26% on a month to month basis to just above 5.47 million barrels a day with crude product imports declining 6% against an 11% decline in exports.
Robust Chinese crude demand has been one of the pillars supporting oil prices as they recovered from 6 year lows amid a surge in supply.
Limiting the declines, however, was a decline in the dollar, according to the Reuters dollar index, which fell by about half a percentage against a basket of foreign currencies.
A weaker dollar is bullish for the demand of commodities priced in dollars like oil as it makes them cheaper to holders of other currencies.
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