LONDON—Oil prices dipped on Tuesday as fresh data added to gloom over the state of China’s post-pandemic recovery, although expectations of an extension in supply cuts by leading OPEC+ producers limited losses.
By 0933 GMT, Brent crude futures for November were down 51 cents at $88.49 a barrel, while U.S. West Texas Intermediate crude (WTI) October futures edged 14 cents lower to $85.41 a barrel.
China, the world’s second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its sluggish economic activity has frustrated markets as pledged stimulus has fallen short of expectations.
A private-sector survey on Tuesday showed that China’s services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world’s biggest oil importer.
Analysts said the markets had priced in China’s recent effort to boost the economy, offsetting support from expected oil supply cuts.
Meanwhile, data from Europe was also grim. A survey showed a steeper-than-expected decline in eurozone business activity last month as the bloc’s dominant services industry contracted, suggesting the bloc could drop into recession.
In Britain, a survey indicated service activity fell in August, the first drop since January as higher interest rates reduced consumer and corporate demand.
In Japan, the world’s third-biggest economy, household spending in July fell 5.0 percent from a year earlier, deeper than a forecast decline of 2.5 percent and continuing into a fifth month of falls.
Eyes are also on U.S. economic data expected later on Tuesday for clues on whether the Federal Reserve will end its aggressive interest rate hike campaign.
Saudi Arabia is widely expected to extend voluntary oil cuts into October and Russia will unveil a new OPEC+ supply cut deal this week, according to its deputy prime minister.
Moscow has already announced it will cut exports by 300,000 barrels per day (bpd) in September, following a 500,000 bpd cut in August. Riyadh is also expected to roll over a voluntary 1 million bpd cut into October.
“Given market expectations, it is unlikely that the two producers would stray away from an extension and so risk a sell-off in the market,” ING analysts said.
