Investing.com — Oil prices fell slightly on Monday after weak business activity data from China pointed to worsening economic conditions in the world’s largest oil importer, although the prospect of more stimulus measures in the country kept losses limited.
Prices were sitting on five straight weeks of gains, and were also set for stellar gains in July as signs of tightening global supplies this year invited more long positioning in crude markets.
But this rally now appeared to be on hold, amid continued signs of weak economic conditions in China. Markets were also awaiting more cues on the U.S. economy from nonfarm payrolls data due later in the week.
futures fell 0.3% to $84.14 a barrel, while futures fell 0.3% to $80.35 a barrel by 22:258 ET (02:28 GMT).
China stimulus in focus after weak PMIs
Data on Monday showed that shrank for a fourth straight month in July, while also deteriorated as the country struggles with a slowing post-COVID economic recovery.
But concerns over the weak data were largely offset by expectations of more stimulus measures from the country, with media reports suggesting that officials are set to unveil more spending measures later on Monday.
Monday’s data furthered the case for more fiscal support for the economy, as it struggles with weak spending and slowing inflation.
While Chinese oil imports have remained close to record levels this year, fuel demand in the country has remained well below pre-COVID levels. Oil bulls are betting that more stimulus measures in the country will help improve fuel consumption.
Promises of more Chinese stimulus were also among the key factors behind an oil market rally over the past month, as the country’s top policymakers vowed to further support the economy.
Oil set for best month since Jan 2022
Despite stalling on Monday, oil price futures were set to add between 12% and 14% in July – their best monthly performance since January 2022.
Signs of tightening supplies, following production cuts by major oil exporters Saudi Arabia and Russia, were the biggest boost to the market over the past month. Recent production cuts from the two nations are also expected to keep markets tight for the remainder of the year.
Weakness in the , following mixed signals on future rate hikes from the Federal Reserve, also aided oil prices, as did signs of steady fuel demand in the U.S.