Oil futures on Monday kicked off August on a softer note after weak data on activity in China and as traders assessed a reading on output by the Organization of the Petroleum Exporting Countries, or OPEC.
West Texas Intermediate crude for September delivery
the global benchmark, was off 88 cents, or 1.2%, at $74.53 a barrel on ICE Futures Europe.
In China, data released Saturday by the National Bureau of Statistics showed the country’s official purchasing managers index fell to 50.4 in July from 50.9 in June. Numbers above 50 indicate expansion.
“Oil prices are failing to see any recovery as investors are concerned about China’s economic recovery,” said Naeem Aslam, chief market analyst at AvaTrade, as well as increases in oil supply as OPEC and its allies further relax output curbs this month.
OPEC+ agreed last month to lift output by 400,000 barrels a day each month beginning in August until existing curbs are eliminated next year. A Reuters survey released Saturday found that OPEC members had boosted output in July by 610,000 barrels a day, to 26.72 million barrels a day.
The survey indicated OPEC members, led by Saudi Arabia, continue to be in “overcompliance” with production curbs, analysts said.
“All in all, OPEC production remains more reduced than planned, meaning that the ‘overcompliance’ has declined slightly (115% compliance in July after 118% in June),” wrote analysts at Commerzbank, in a note. “Given the current undersupply of the market, it can only be hoped that OPEC+ will make more than the planned 400,000 additional barrels per day available in August.”