Oil prices fall as weak factory data fuels global demand concerns
A Shell oil refinery at Wesseling near Cologne, in Germany, July 4, 2022. /CFP

A Shell oil refinery at Wesseling near Cologne, in Germany, July 4, 2022. /CFP

Oil prices dropped again on Tuesday as investors absorbed a bleak outlook for fuel demand, with data pointing to a global manufacturing downturn just as major crude producers meet this week to determine whether to increase supply.

Brent crude futures fell 77 cents, or 0.8 percent, to $99.26 a barrel by 0421 GMT, while West Texas Intermediate (WTI) crude futures eased 67 cents, or 0.7 percent, to $93.22 a barrel.

The slide came after Brent futures slumped on Monday to a session low of $99.09 a barrel, their lowest since July 15. The U.S. crude benchmark dropped to as low as $92.42 a barrel, its weakest since July 14.

"Crude prices tumbled after a wealth of factory activity data suggests the world is heading towards a giant global economic contraction, and on expectations for more oil output following a very good earnings season for oil companies," said Edward Moya, a senior market analyst from OANDA, in a note.

Recessionary concerns were heightened on Monday as surveys from the U.S., Europe and Asia showed that factories struggled for momentum in July.

The price drops also come as market participants await the outcome of a meeting on Wednesday between the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, together known as OPEC+, to decide on September output.

Two of eight OPEC+ sources in a Reuters survey said that a modest increase for September would be discussed at the August 3 meeting. The rest said output is likely to be held steady.

A Fox Business news reporter said Saudi Arabia would push OPEC+ to increase oil production at the meeting.

"The upward momentums of oil prices have been gradually fading ... Once the supply and demand situation shows any sign of further deterioration, oil is likely to lead the decline among commodities," analysts from Haitong Futures said.

(With input from Reuters)

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