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Oil sinks after weak factory data sparks demand concerns By Reuters

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Oil sinks after weak factory data sparks demand concerns By Reuters


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© Reuters. FILE PHOTO: An oil tanker is pictured in the waters off Tuas, Singapore, July 15, 2019.REUTERS/Edgar Su/File photo

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Stephanie Kelly

NEW YORK (Reuters) – Oil prices fell sharply on Monday as weak manufacturing data from several countries weighed on the demand outlook, while investors braced for a supply meeting this week from OPEC and its oil-producing allies.

Futures were down $4.10, or 3.9%, at $99.87 a barrel at 1:19 p.m. ET (1719 GMT), falling to a session low of $99.09 a barrel.

U.S. West Texas Intermediate crude fell $4.93, or 5 percent, to $93.69 a barrel after hitting a low of $92.42.

Wang Tao, a technical analyst at Reuters, said that if Brent crude prices fell below the $102.68 support, it could trigger a fall to the $99.52 to $101.26 range. [TECH/C]

Factories in the U.S., Europe and Asia struggled to gain momentum in July as weak global demand and China’s strict COVID-19 restrictions slowed production, a survey on Monday showed, possibly adding to fears of an economy slipping into a recession. ‘s concerns.

Brent and WTI both ended July with their first consecutive monthly losses since 2020, as soaring inflation and rising interest rates sparked fears that a recession will erode fuel demand.

Analysts polled by Reuters lowered their forecast for Brent to average $105.75 in 2022, the first cut since April. Their estimate for WTI fell to $101.28.

However, questions about global supply loomed in the oil market.

“There’s still a disconnect between the economic data and what we’re seeing on the supply side,” said Phil Flynn, an analyst at Price Futures Group. “The oil market is still very tight and going into OPEC will be tight.”

The Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, met on Wednesday to decide September output.

Two of eight OPEC+ sources polled by Reuters said a modest output increase in September would be discussed at the Aug. 3 meeting. The rest said output is likely to remain stable.

US President Joe Biden visited Saudi Arabia last month.

“While President Biden’s visit to Saudi Arabia did not result in immediate oil deliveries, we believe the kingdom will pay off by continuing to gradually ramp up production,” RBC Capital analyst Helima Croft said in a note.

While OPEC+ aims to fully lift record output cuts by this month, data showed the group was still nearly 3 million barrels a day short of its output target as of June as some producers struggled to get wells back on track.

Oil production in Libya rose to 1.2 million bpd from 800,000 bpd on July 22 after a blockade on several oil facilities was lifted, also weighing on prices.

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