Oil prices declined on Monday, dragged down by weak economic data from China and a stronger US dollar. Benchmark Brent crude dropped 1.2% to $85.72 per barrel while WTI slid 0.9% to $82.46.
Prices had rebounded in recent weeks after Saudi Arabia announced further output cuts in June as part of the OPEC+ agreement. However, the gains proved short-lived.
Latest figures from China showed deflation in consumer prices and extended declines in factory gate inflation. Customs data also revealed exports plunged 14.5% in July, the largest drop since early 2020, while imports fell 12.4%.
Manufacturing activity continued to contract in July according to official PMI data, adding to concerns over fuel demand in the world's second-largest oil consumer. Other Chinese economic indicators have also disappointed.
Additionally, the US dollar strengthened against major currencies after US inflation data showed consumer prices rose 3.2% annually in July. A stronger dollar makes crude imports more expensive for countries using other currencies.
While OPEC+ supply cuts have supported prices, weak Chinese economic data and a rallying greenback are capping gains. Investors remain worried about the outlook for global demand as recession risks grow.
