Oil extends second weekly drop on new China recovery concerns

Oil extended two weeks of losses after data from China reignited concerns about a patchy recovery in the world’s biggest crude importer.

West Texas Intermediate futures slipped 0.7 per cent, after rallying 2.7 per cent on Friday on the back of strong US company earnings to pare a weekly decline.

China’s manufacturing activity unexpectedly contracted in April, data released Sunday showed, in a sign the nation’s economy may be struggling to regain momentum.

Hedge funds and money managers have turned deeply bearish on crude after prices swung sharply in April — surging to a 15-month high after the Organization of Petroleum Exporting Countries and its allies announced an output cut, before giving up those gains amid a deteriorating outlook.

With China on holiday for most of this week, the focus will likely be on whether major central banks including the Federal Reserve will continue tightening rates.

“Investors remain cautious amid mixed economic signals,” ANZ Banking Group analysts Brian Martin and Daniel Hynes said in a note.

“A hawkish tone from the Fed could put pressure on energy and metals.”

Read: UAE’s non-oil foreign trade grows 17% in 2022