Oil slumped, putting an end to two days of gains caused by reduced supply from Canada after macroeconomic data from China strengthened the country’s recovery this year and concerns about energy demand.
US crude oil declined below $73 after rising close to 7 percent in the previous two sessions.
Trade data indicated that China’s overall export growth slowed in April, while imports fell sharply, adding to pressures on the recovery that has been questioned for some time. Although refinery maintenance put pressure on April volumes, crude imports continued to rise since the beginning of the year.
Investors will wait for insights into the US market while waiting for the short-term market outlook to be announced by the Energy Information Administration (EIA) on Tuesday.
The drop in prices came despite the surprise production cut from OPEC+ countries.
Crude oil has slid nearly 9 percent this year as futures slammed into the ups and downs caused by the Fed’s monetary tightening campaign, fears the U.S. economy could soon enter a recession, and hopes for a resurgence in energy demand after China abandoned its zero-COVID policy.
In Canada, at least 234,000 barrels of oil and gas production was interrupted a day due to forest fires in Alberta. Blackouts in the region, which is a major hub for oil production, have led to higher prices for some local grade crude oil.
“Supply concerns arose as wildfires in Alberta led to evacuation of residents and shut down the oil pipeline system,” said Charu Chanana, market strategist at Saxo Capital Markets Pte.
U.S. crude oil for June delivery fell 0.6 percent to $72.74 a barrel.
Brent crude for July delivery fell 0.6 percent to $76.56 a barrel.