Oil prices fell on Thursday as concerns about a weak economic recovery in China offset prospects of tight supply in the market.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.42 per cent lower at $76.33 a barrel at 9.25pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 0.22 per cent to $71.63.
Crude futures gained this week on the back of announcements that Saudi Arabia and Russia will reduce their oil supplies in August.
“But ultimately, another failure to break above the [current oil price] range will suggest traders have largely shrugged it off,” said Craig Erlam, senior market analyst at Oanda.
“The previous high in Brent two weeks ago came just above $77 and a failure to hit that will represent yet another lower peak over the last month or so and may, therefore, merely confirm that we remain in a very gradual consolidation,” Mr Erlam said.
Meanwhile, China's services activity in June grew at its slowest pace in five months.
The Caixin services index slipped to 53.9 in June, from 57.1 in May, signalling slowing growth in the sector, which has been driving the recovery in China’s economy this year.
The services sector accounted for about 53 per cent of the world's second-largest economy in 2021.
On Wednesday, Saudi Arabia’s Energy Minister said that Opec+ would continue to pursue efforts to stabilise the oil market and would do “whatever is necessary”.
Prince Abdulaziz bin Salman, who was speaking at the Opec Seminar in Vienna, said the market would not be left “unattended” and added that the output policy announced on June 4 was “too big for people to comprehend”.
His remarks came after the world’s largest oil exporter said it would extend its voluntary production cut of a million barrels per day, which was initially announced for July, for another month.
Russia is also cutting its oil exports by 500,000 bpd in August on top of the output reductions that have already been announced, state news agency Tass reported earlier this week.
Last month, the alliance of 23 oil-producing countries agreed to stick to its existing output policy until the end of 2024.
The group has total production curbs of 3.66 million bpd, or about 3.7 per cent of global demand, in place, including a two million bpd reduction agreed last year and voluntary cuts of 1.66 million bpd announced in April.
“A glance at oil prices and you would not know that two of the largest producers pledged to continue curbing output this week,” said Ehsan Khoman, head of commodities, ESG and emerging markets at MUFG.
“These cuts accentuate coherence and consistency within the alliance while equally being precautionary and proactive, in our view.”
This aim of the production cuts is to stabilise oil prices by establishing a price floor, rather than being seen as Opec+ reacting to weak demand, Mr Khoman said.
