U.S. crude fell below $71 a barrel after rising more than 2 percent last week as China cut interest rates and hinted at more support. Investors’ focus was on the second day of his visit to Beijing, after US Secretary of State Antony Blinken made a positive start to the trip.
Crude trading volumes could be lower than normal on Monday as the US celebrates the ‘Juneteenth’ holiday, especially for US crude.
Oil slumped in the first half of the year as China’s zero-COVID recovery was insufficient and global supplies, including Russia, remained plentiful. The Organization of the Petroleum Exporting Countries and its allies have announced supply cuts, including a voluntary cut of 1 million barrels per day from Saudi Arabia from July, to stem the decline.
“Prices continue to be locked in a consolidation pattern,” said Yeap Jun Rong, market strategist at IG Asia Pte. The worst economic conditions that could keep prices low for longer are yet to be seen, he said.
Local Chinese media is full of reports of further economic support to come, though details are scarce. Goldman Sachs Group Inc. was the latest bank to lower its forecasts for the Chinese economy, citing limited options to increase stimulus, according to a research report on Sunday.