U.S. West Texas Intermediate crude slipped 51 cents, or 1.3%, to $ 39.26 a barrel after falling earlier to $ 38.55, the lowest since July 10.
The world remains inundated with crude and fuel despite supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and their allies, known as OPEC +, and government efforts to boost oil production. world economy and demand for oil. As a result, refiners have cut back on fuel production, prompting oil producers like Saudi Arabia to cut prices to offset the drop in demand for crude.
“The sentiment has turned sour and there may be some selling pressure,” said Howie Lee, an economist at Singapore’s OCBC bank.
Monday’s Labor Day holiday marks the traditional end of the peak summer demand season in the United States and has renewed investor attention to the current lackluster fuel demand of the world’s largest oil user. world.
China, the world’s largest importer of oil that has supported prices with record purchases, slowed consumption in August, customs data showed Monday.
“The abundance of supplies, fears of loosening OPEC + compliance, the end of the driving season in the United States and the long and outdated positioning have combined to erode confidence in oil,” said Jeffrey Halley, senior market analyst at OANDA.
Saudi Arabia, the world’s largest oil exporter, has lowered the official October selling price of Arab Light crude it has been selling to Asia since May, indicating that demand remains weak. Asia is Saudi Arabia’s largest market by region.
In August, the OPEC + group eased production cuts to 7.7 million barrels per day after global oil prices improved from historic lows caused by the coronavirus pandemic reducing fuel demand.
Oil is also under pressure as US companies increased drilling for new supplies after the recent recovery in oil prices.
U.S. energy companies last week added oil and gas rigs for the second time in the past three weeks, according to a weekly report from Baker Hughes Co on Friday.