Oil falls more than $1 on uncertainty over China’s growth

TOKYO, June 19 (Reuters) – Global oil prices fell more than $1 on Monday, bolstering last week’s gains, as questions about China’s economy offset OPEC+ production cuts and the seventh straight drop in the number of oil and gas rigs operating in the United States.

Brent crude lost $1[ads1].15, or 1.5%, to trade at $75.46 a barrel by 0350 GMT, while US West Texas Intermediate (WTI) crude was down $1.09, or 1.5%, to $70.69.

Last week Brent had a gain of 2.4% and WTI rose 2.3%.

“China’s economic uncertainty may have caused the sell-off following a two-day rally in oil markets ahead of The People’s Bank of China’s (PBOC) lending prime rate (LPR) decision this week,” said CMC Markets analyst Tina Teng.

A number of major banks have cut their 2023 gross domestic product growth forecasts for China after data from May last week showed the post-COVID-19 recovery in the world’s second-largest economy was faltering.

The PBOC is widely expected to cut its benchmark prime rates on Tuesday, following a similar reduction in medium-term borrowing last week to shore up a faltering economic recovery.

Sources have told Reuters that China will roll out more stimulus support for its slowing economy this year, but concerns about debt and capital flight will keep the measures aimed at propping up weak demand in the consumer and private sectors.

Still, China’s May refinery throughput rose to the second-highest total on record, helping to extend last week’s gains, and U.S. energy companies cut the number of working oil and natural gas rigs for a seventh straight week for the first time since July 2020.

The oil and gas rig count, an early indicator of future production, fell by 8 to 687 in the week to June 16, the lowest since April 2022. , , .

Oil prices on Monday are also lower on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, or OPEC+, will struggle to meet production quotas, said Edward Moya, senior analyst at OANDA.

“Rosneft suggests that the cartel of oil producers is focusing on exports and not production,” Moya said, referring to comments by Igor Sechin, head of Russian energy major Rosneft ( ROSN.MM ).

Speaking at an economic forum on Saturday, Sechin said it would be appropriate for OPEC+ to monitor oil export volumes as well as production quotas because of the different sizes of each country’s domestic markets.

Earlier this month, OPEC+ had agreed on a new oil production deal. The group’s biggest producer, Saudi Arabia, also promised to make a deep cut in production in July.

Reporting by Katya Golubkova in Tokyo and Emily Chow in Singapore; Editing by Tom Hogue

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