Oil prices declined on Monday, reversing five consecutive days of gains, as investors booked profits after the release of a report on China’s slowing economic activity, the world’s largest oil importer, which reignited fears about a decline in global fuel consumption.
As of 06:45 GMT, Brent oil futures for December delivery dropped as much as 1.1% to $97.53 a barrel, down 39 cents or 0.4%.
West Texas Intermediate oil for delivery in November fell as much as 1.1% to a low of $92.27 a barrel, a decrease of 37 cents or 0.5%.
According to statistics released on Saturday, China’s services sector fell in September for the first time in four months due to COVID-19 limitations on demand and company confidence.
The slowdown in China’s economy, the second-largest oil user in the world after the United States, adds to rising fears about a probable worldwide recession sparked by multiple central banks’ hiking interest rates to battle soaring inflation.
“Oil is facing the triple trifecta of China’s economic instability, U.S. monetary policy tightening, and SPR involvement by the Biden administration,” said Stephen Innes, managing director of SPI Asset Management.
Innes was referring to the possibility of additional releases from the U.S. Strategic Petroleum Reserve next month in response to the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, known as OPEC+, reducing their output target by 2 million barrels per day last week.