Oil Slips as Factories, Housing Flash Latest Economic Warnings
(Bloomberg) -- Oil slipped further into a bear market as American factories and homebuilders offered the latest signs of weakening demand.
Futures slid 1.1% in New York while London-traded Brent crude fell almost 2% as OPEC and its allies struggled to pick a meeting date to discuss supply cuts. In the U.S., the Federal Reserve found a record slowdown in June for New York State factories while sentiment among housing contractors unexpectedly dropped for the first time all year.
Commerce Secretary Wilbur Ross, meanwhile, downplayed expectations for a U.S.-China trade breakthrough at this month’s G-20 summit in Japan.
“OPEC will inevitably do what it needs to do, but that can’t happen without a lag,”Bart Melek, head of commodity strategy at Toronto’s TD Securities, said in an interview. “So the question for the market now is what happens to the demand side of the equation.”
Monday’s decline halted a two-day rally for prices that followed last week’s attacks on oil tankers in the Middle East. Swelling American stockpiles and the U.S.-China trade rift have helped drive prices into a bear market, down more than 20% since a late April peak.
The retreat came as the OPEC+ producer alliance worked to schedule a gathering to formally extend production cuts. Iran, the lone holdout, is willing to meet in late June or mid-July, Oil Minister Bijan Namdar Zanganeh told reporters in Tehran on Monday. Still, he and Russian Energy Minister Alexander Novak failed to settle on a date.
West Texas Intermediate for July delivery closed 58 cents lower at $51.93 a barrel on the New York Mercantile Exchange. Brent for August settlement fell $1.07, or 1.7%, to $60.94 a barrel on London’s ICE Futures Europe Exchange.
See also: Saudi Arabia Seeks to Balance Global Crude Markets Before 2020
As the trade war drags on, pressure is building on OPEC+ to extend its output limits into the second half of the year. The alliance will probably meet in “the first week of July, and that will secure the rebalancing the market,” Saudi Energy Minister Khalid Al-Falih said Sunday.
--With assistance from Sharon Cho.
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