Oil down as bearish China data casts doubt on demand recovery

Oil prices declined on Friday after China’s bearish economic data cast doubt on the growth of the country’s already fragile economy and reports of a US denial on reviving the Iran nuclear deal raised supply concerns.

International benchmark Brent crude traded at $75.62 per barrel at 10.24 a.m. local time (0724 GMT), a 0.45% loss from the closing price of $75.96 a barrel in the previous trading session on Friday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $71 per barrel, down 0.41% from the previous session’s close of $71.29 per barrel.

The producer price index (PPI) for May in China fell for the eighth consecutive month, down 4.6%, the National Bureau of Statistics (NBS) said on Friday. The data pushed down oil prices, highlighting lingering fears about low demand in the world’s largest oil importer.

This came after data from China’s Customs Bureau on Monday showed a decline in the country’s imports.

Imports in the world’s second-largest economy contracted 4.5%, slower than an expected 8% decline and April’s 7.9% fall.

Prices further fell due to supply side woes after the US denied reports that Iran and the US were close to an interim deal to reinstate the 2015 nuclear agreement between Iran and the US. Washington immediately called the report ‘false and misleading.’

If an agreement is reached, restrictions on Iranian oil exports and economic activities will be relaxed, potentially bringing more barrels to the market at a time when OPEC+ has resolved to cut oil production even more.

Also, barring price upticks, US gasoline inventories rose by around 2.7 million barrels to 218.8 million barrels during the week ending June 2, signaling a drop in demand ahead of the summer travel season.

Investors are now focused on next week’s Fed meeting, during which analysts mostly expect a pause in interest rate hikes in the country’s fight against rising inflation.

• The American benchmark West Texas Intermediate (WTI)