Oil futures finished lower on Monday, as a drop in Chinese oil imports and the lingering effects of last week’s decision by the Organization of the Petroleum Exporting Countries to keep its production ceiling unchanged sent prices for the U.S. benchmark well below $59 a barrel. On the New York Mercantile Exchange, July crude settled at $58.14 a barrel, down 99 cents, or 1.7%. July Brent crude on London’s ICE Futures exchange fell 62 cents, or 1%, to $62.69 a barrel.
The price decline was “really a hangover from the Chinese data,” said Phil Flynn, senior market analyst at Price Futures Group. The Group of Seven meeting was not giving oil any market-moving headlines so prices retraced Friday’s late price reversal, which was based on data showing another decline in U.S. oil-rig counts, he said. On Monday, data showed China’s May crude-oil imports fell 11% from a year earlier. Strong Chinese oil demand has been one of the few pillars of oil support so far this year and signs of softening demand will weigh on oil prices.
Also Monday, the Energy Information Administration said oil production from seven major U.S. shale plays is expected to fall by 91,000 barrels a day in July from June. More estimates on output could come from a spate of monthly oil reports due this week. The EIA is scheduled to release its monthly short-term energy outlook on Tuesday, OPEC will issue its oil report Wednesday and the International Energy Agency‘s report comes out Thursday. Oil markets have struggled to sustain a price rally, as bearish supply indicators such as Saudi Arabia’s record output have offset signs of a decline in U.S. shale oil production. This bearishness was reinforced after OPEC decided on Friday for the second time in about six months to take no action amid a global supply glut. But “with the OPEC news behind us and the cartel doing what the world expected, focus now turns to the deadline of the Iran nuclear deal on June 30,” said Brian Swan, commodity analyst at Schneider Electric. Oil sanctions could be lifted and “more Iranian oil could hit the market.”