Oil prices dipped slightly on Monday following disappointing economic data from China, though they retained most of last week’s gains amid investor optimism over upcoming U.S.-China trade negotiations.
Brent crude futures fell 18 cents, or 0.27%, to $66.29 a barrel by 0644 GMT, while U.S. West Texas Intermediate (WTI) crude declined 15 cents, or 0.23%, to $64.43.
Investors are closely watching trade discussions between the U.S. and China scheduled for later in the day in London. Hopes that a breakthrough could boost global economic sentiment and energy demand have helped limit oil’s losses.
China’s export growth slowed to a three-month low in May, with official data attributing the decline to the impact of U.S. tariffs. The data also revealed deepening factory-gate deflation, marking the steepest decline in producer prices in two years, raising fresh concerns about domestic and external demand in the world’s second-largest economy.
Additionally, China’s crude oil imports fell to a four-month low in May, as major refiners underwent scheduled maintenance. The drop in imports added downward pressure on oil prices already grappling with demand concerns.
“This is bad timing for crude oil, which was testing the top of its range and close to a technical breakout above $65,” said Tony Sycamore, market analyst at IG. “However, the reaction may be muted, with trade talks between the U.S. and China taking place later today.”
Last week, Brent rose 4% and WTI gained 6.2%, marking their first weekly increases in three weeks. The gains were driven by improved investor sentiment over a potential U.S.-China deal and support from macroeconomic data, including steady U.S. unemployment figures that increased the likelihood of a Federal Reserve rate cut.
Expectations of a trade agreement that could bolster global growth helped overshadow concerns about rising OPEC+ output. On May 31, the producer group announced plans for a significant production hike in July.
HSBC said in a Friday research note that it expects OPEC+ to accelerate production increases through August and September, which could undermine its $65-per-barrel Brent forecast for the fourth quarter of 2025.
Analysts at Capital Economics believe the faster pace of OPEC+ production hikes is likely to continue, further influencing global supply dynamics.
ING analysts, led by Warren Patterson, noted that the price gap between WTI and Brent has narrowed due to rising OPEC+ output, modest U.S. production growth, and the potential for output declines in 2026.
WTI prices also drew strength from supply disruptions in Canada caused by wildfires and strong U.S. fuel demand during the summer driving season.
Baker Hughes reported that the number of active U.S. oil rigs — a key indicator of future production — fell by nine to 442 last week, suggesting a possible slowdown in output.
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