Chinese consumer inflation shrank in May from the prior month, while factory gate inflation hit a seven-year low as an economic recovery in the country sputtered through the second quarter.

The readings, coupled with a string of weak economic prints from the country over the past two weeks, further undermined bets that a recovery in China will push oil demand to record highs this year. 

Fears of slowing demand also largely offset signs of tighter supply following a fresh production cut by Saudi Arabia, and put crude prices on course for a second straight week of losses.

Brent oil futures fell 0.7% to $75.44 a barrel, while West Texas Intermediate crude futures fell 0.7% to $70.81 a barrel by 22:18 ET (02:18 GMT). Both contracts were set to lose between 0.6% and 1.2% this week. 

While Chinese oil imports still rose through May, analysts attributed the rise largely to local refiners building inventory, and that fuel demand in the world’s largest oil importer still remained weak.

Soft economic indicators from the world’s largest oil consumer also stymied crude markets this week.

U.S. inventory data showed that gasoline stockpiles unexpectedly rose in the past week, ducking expectations that fuel demand will increase as the travel-heavy summer season approaches.

Signs of a U.S. economic slowdown continued to trickle in, with recent indicators showing that business activity slowed through May, while the jobs market showed some signs of cooling. The weak readings pulled down the dollar, but offered little support to crude as traders fretted over worsening U.S. growth.

Reports of a U.S.-Iran nuclear deal, which could flood the market with more crude, also dented oil prices this week, although White House officials denied any such agreement.

Focus is now squarely on an upcoming Federal Reserve meeting next week, for more cues on how the central bank plans to approach policy amid worsening economic conditions.

Market expectations are largely skewed towards a pause in the Fed’s rate hike cycle, which could provide some near-term support to oil by weighing on the dollar.

But given that recent personal consumption and labor market indicators still beat expectations, traders remained uncertain over just what the Fed will signal.

This uncertainty also weighed on oil markets through the week.

https://www.investing.com/news/commodities-news/oil-slips-as-weak-chinese-data-fuels-demand-concerns-3101587

Oil prices crept lower in Asian trade on Tuesday as initial optimism over more supply cuts by Saudi Arabia and the OPEC was largely offset by persistent concerns over slowing economic growth and weakening demand.

While crude markets initially marked a strong rally in response to more production cuts by Saudi Arabia on Monday, they pared a bulk of their gains by the end of the session as weak U.S. economic data ramped up concerns over a recession this year.

Saudi Arabia pledged to cut production by an additional 1 million barrels per day (bpd) in July, adding to a total of 3.66 million in supply cuts by the OPEC since October. But markets questioned whether lower production targets for other OPEC+ members- particularly Russia, Angola and Nigeria, would have a tangible impact, given that they bring the targets in line with actual output levels.

Markets also bet that any slowdown in demand will largely outweigh tighter supplies this year.

Brent oil futures fell 0.5% to $76.17 a barrel, while West Texas Intermediate crude futures fell 0.8% to $71.58 a barrel by 21:30 ET (01:30 GMT). Both contracts rose as much as 3% on Monday before settling up between 0.6% and 0.8%. 

Data on Monday showed that U.S. service sector activity barely grew in May, as strong growth seen over the past few months now appeared to be running out of steam. The data put more headwinds to the U.S. economy- chiefly rising interest rates and high inflation- in stark focus, ahead of a Federal Reserve meeting next week.

Markets are split over whether the central bank will hike or hold interest rates, given somewhat mixed signals on the move in recent weeks. While inflation and labor market data surprised to the upside, several Fed officials have called on the bank to hold rates and watch for more effects of its year-long rate hike spree, given that several facets of the U.S. economy have cooled in recent months.

Focus this week is also on economic readings from major crude importer China, amid growing concerns that a post-COVID rebound in the country is running out of steam.

Inflation and trade data from China is on tap this week, with the latter expected to provide more cues on the country’s appetite for commodities amid weak manufacturing activity.

Still, data this week showed that China’s services sector grew more than expected in May, indicating some resilience in the economy after the lifting of anti-COVID measures earlier this year. 

https://www.investing.com/news/commodities-news/oil-edges-lower-as-opecdriven-rally-fizzles-out-3098698