LONDON (Bloomberg) -- Oil fell on Monday, with poor manufacturing figures across the globe fueling concerns that a global slowdown may sap demand.
West Texas Intermediate slid below $97 a barrel, after sinking almost 7% in July in the first back-to-back monthly loss since late 2020. Weekend data indicated a surprise contraction in Chinese factory activity, highlighting the cost of mobility curbs to tackle COVID outbreaks. Purchasing managers’ indexes also weakened in South Korea and the euro area’s four largest members.
Oil trading has been volatile in recent months as concerns about a slowdown hurt demand for commodities even as underlying signals point to a relatively tight physical market. Data last week showed the U.S. economy shrank for a second quarter, while the Federal Reserve hiked rates by 75 basis points.
“There are many reasons why oil is down,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Weak Chinese and European PMIs, as well as recovering Libyan production.”
Libya’s crude output has rebounded after a series of disruptions that more than halved supply, according to Oil Minister Mohamed Oun. Nationwide production has returned to 1.2 million barrels a day, a level last seen in early April, Oun said in a telephone interview.
Fellow OPEC+ producer Russia has also seen flows disrupted as multiple buyers around the world shun its crude. Yet traders are studying the possibility of a slight increase in Russian oil exports after the European Union adopted a number of amendments to sanctions last month.
The Organization of Petroleum Exporting Countries and its allies will meet later this week to set output policy for September. While the U.S. has lobbied Saudi Arabia to loosen the taps -- raising pressure on Russia -- Moscow and Riyadh recently reaffirmed their joint commitment to a stable market.