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Oil prices eased in Asia on Tuesday as early optimism over further supply cuts from Saudi Arabia and OPEC was largely overshadowed by ongoing concerns about slowing economic growth and falling demand. Today’s commodity news on world crude prices is summarized as a whole based on reports from Investing.com. While the crude market initially rallied strongly in response to Saudi Arabia’s further production cuts on Monday, those gains were largely eroded by the end of the session as weak economic data from the United States raised fears of a recession this year. Saudi Arabia has pledged to cut output by an additional 1 million barrels per day (bpd) in July, bringing the total supply cuts by OPEC since October to 3.66 million barrels. However, the market is questioning whether the targeted production cuts for other OPEC+ members, notably Russia, Angola and Nigeria, will have any real impact, given that the targets are in line with actual production levels. The market is also taking a risk that any slowdown in demand will outweigh the tight supply this year. Brent crude futures fell 0.5% to $76.17 a barrel, while West Texas Intermediate (WTI) crude futures fell 0.8% to $71.58 a barrel by 9:30 p.m. ET (1:30 a.m. GMT). Both contracts rose as much as 3% on Monday before settling in a range of 0.6% to 0.8%. Data on Monday showed that U.S. service sector activity barely grew in May. After months of strong growth, the sector now appears to be losing momentum. The data puts more pressure on the health of the U.S. economy, particularly rising interest rates and high inflation, which will be a major focus ahead of next week’s Federal Reserve meeting. Markets are divided on whether the central bank will raise or hold rates, given the somewhat mixed signals in recent weeks. Despite surprisingly strong inflation and labor market data, some Federal Reserve officials have called for the central bank to keep interest rates on hold and monitor the impact of the rate hikes that have taken place over the past year. This is due to the deterioration in several aspects of the US economy in recent months. This week’s focus will also be on economic data from major crude importer China, as concerns grow that the country’s post-COVID economic recovery is slowing. Inflation and trade data from China are due this week, and these are expected to provide further clues about the country’s demand for commodities, especially in the context of weak manufacturing activity. However, data this week showed that China’s services sector expanded more than expected in May, suggesting the economy is holding up well after the easing of Covid-19 restrictions earlier this year.
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