TOKYO/SINGAPORE- Oil prices fell on Wednesday, reversing some gains made after Saudi Arabia and Russia announced they would extend and deepen output cuts into August, as concerns over a global economic slowdown weighed on market sentiment.
Brent crude was down 46 cents, or 0.6 percent , at $75.79 a barrel after climbing $1.60 on Tuesday.
US West Texas Intermediate (WTI) crude futures were at $70.87 a barrel, up $1.08, or 1.6 percent , from Monday’s close, having traded through a US holiday to mark Independence Day without a settlement.
“Oil prices came under pressure again due to lingering worries over a slowdown in the global economy and further hikes of interest rates in the United States and Europe,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
“The market will likely continue to move back and forth for some time, focusing on economic indicators in China and monetary policy by central banks,” he said, predicting Brent would trade around $75 a barrel.
A private-sector survey on Wednesday showed China’s services activity expanded at the slowest pace in five months in June, as weakening demand weighed on post-pandemic recovery momentum.
The market is also awaiting minutes from the June 13-14 meeting of the Federal Open Market Committee (FOMC) later on Wednesday for further clues on the US central bank’s outlook.
Production cuts announced by Saudi Arabia and Russia on Monday only briefly lifted the market, amid concerns about weak demand and further interest rate hikes, which could trigger an economic downturn and dampen fuel demand further.
