By Natalie Grover
LONDON (Reuters) – Oil slipped on Monday, with global benchmark Brent dipping below $82 a barrel as concern faded about fighting in the Middle East disrupting supply and softening demand in China also weighed.
Brent futures were down 58 cents at $81.50 a barrel at 1444 GMT, while U.S. West Texas Intermediate (WTI) slipped 93 cents, or 1.2%, to $77.08.
“It seems that the Middle East conflict is not high on the list of driving forces of investors, as it has not led to meaningful supply disruptions and (is) unlikely to do so going forward,” said Tamas Varga of oil broker PVM.
“Instead, (the) focus is on the ailing Chinese economy and on rate cuts.”
Both benchmarks ended the week lower on bearish Chinese data that signalled weaker demand in the world’s leading crude importer. Brent closed down 1.8%, although the contract has remained above $80 a barrel for over a month. WTI ended 2.5% lower.
China’s crude oil imports rose in the first two months of the year compared with the same period of 2023, but were weaker than the preceding months, data showed on Thursday, continuing a trend of softening purchases by the world’s biggest buyer.
Yemen’s Iran-aligned Houthis have been attacking ships in the Red Sea and Gulf of Aden since November in what they say is a campaign of solidarity with Palestinians during Israel’s war against Hamas.
Over the weekend dozens of drones were downed by U.S., French and British forces in the Red Sea area after Houthis targeted bulk carrier Propel Fortune and U.S. destroyers in the region, the U.S. military said.
On Monday, an explosion in the vicinity of a vessel 71 nautical miles southwest of Yemen’s port of Saleef was reported.
Meanwhile mixed signs from U.S. data last week prompted some traders to adjust positions.
U.S. job growth accelerated in February, but a rise in the unemployment rate and moderation in wage gains kept the anticipated June interest rate cut on the table. U.S. inflation data is due on Tuesday.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed early this month to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter.
“This could tighten the market as demand recovers from its seasonal lull,” ANZ Research analysts said.
(Reporting by Natalie Grover in London, Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi; Editing by Ros Russell, Jason Neely and Jan Harvey)
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