The return of Covid lockdowns in China has raised concerns over global energy demand.
Photograph by Mario Tama/Getty Images
Oil prices fell back early Tuesday as traders began to look beyond the output cut announced by members of the Organization of Petroleum Exporting Countries, which led to a rally at the beginning of the week.
Brent crude, the international benchmark, was trading 0.2% lower for the day at $95.56, having reached close to $97 at one point on Monday. West Texas Intermediate, the U.S. benchmark, slipped to $89.11, after climbing above $90 briefly on Labor Day.
OPEC and allies including Russia agreed Monday to cut production by 100,000 barrels a day in October, following a period of falling prices. Oil prices fell for a third consecutive month in August, the longest monthly losing streak since 2020. The cartel’s move boosted prices in the immediate aftermath but the rally has since run out of steam.
“The disturbing global economic outlook combined with prospects for a nuclear deal between the U.S. and Iran created a bearish case for oil prices, something that hasn’t been the case for much of the year,” OANDA analyst Craig Erlam said.
The return of Covid lockdowns in China has also raised concerns over global energy demand in recent weeks.
The cut by OPEC, which opted to raise output by 100,000 barrels a day over the summer, was relatively small but doesn’t mean the producers wouldn’t consider further cuts to keep prices higher.
“The cut was only modest and therefore mostly a form of verbal intervention, sending a signal to the West about OPEC’s ability to influence the market,” Interactive Investor’s head of investment, Victoria Scholar said Tuesday.
Write to Callum Keown at callum.keown@dowjones.com
