Oil prices fell on Monday after strong gains last week, as data released in China reinforced signs that its economy is slowing, though progress in China-U.S. trade talks has supported prices.
Brent crude was down 32 cents, or 0.5%, at $61.70 a barrel by 0933 GMT, having gained more than 4% last week, its best weekly gain since Sept. 20.
West Texas Intermediate (WTI) crude was down 33 cents, or 0.6%, at $56.33 a barrel, after rising more than 5% last week, also the biggest weekly increase since Sept. 20.
Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the impact of a slowing economy and protracted U.S. trade war on corporate balance sheets.
Still, traders were optimistic after the U.S. Trade Representative’s office and China’s Commerce Ministry said on Friday that the two countries were “close to finalizing” some parts of a trade agreement.
“Looking further ahead, if trade talks continue to progress, and we see full agreement to phase 1 of the deal, this should help to improve sentiment further,” ING analyst Warren Patterson said.
U.S. energy companies reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling.
Russia’s energy ministry said that OPEC and its oil-exporting allies, known as OPEC+, would factor in the slowdown of U.S. oil output growth when they meet to discuss their output agreement in December.
However, Russian Deputy Energy Minister Pavel Sorokin said it was premature to talk about deeper production cuts.
OPEC+ has since January implemented a deal to cut output by 1.2 million bpd to support the market. The pact runs to March 2020 and the producers meet to review policy on Dec. 5-6.
“We are of the view that an extension of current cuts is path of least resistance for the producer group, while deeper cuts will be far more difficult to agree on,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London said.
Elsewhere, a suggestion by U.S. President Donald Trump that Exxon Mobil or another U.S. oil company could operate Syrian oil fields drew rebukes from legal and energy experts.
Money managers cut their net long U.S. crude futures and options positions in the week to Oct. 22, the U.S. Commodity Futures Trading Commission said on Friday.