Oil steadied in New York after its biggest loss in three weeks, yet concerns lingered that a slowdown in global economic growth will erode fuel consumption.
West Texas Intermediate futures were little changed near $59 a barrel, after losing 1.6 percent on Friday. A closely watched gauge of U.S. Treasuries inverted for the first time since 2007, a signal a recession may be coming in the world’s largest economy. Some concerns over a new crude glut abated however as drilling rigs in America fell to the lowest in almost a year.
Crude has retreated after reaching a four-month high on Thursday as disappointing global economic data and a lack of resolution to the U.S.-China trade war damped sentiment. The Organization of the Petroleum Exporting Countries and its allies’ commitment to curb output, coupled with supply disruptions in Venezuela and Iran, is stopping prices from falling further.
“Dark clouds are looming over the global economy in ever-increasing numbers,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Concerns surrounding an economic downturn reared their head last week amid a flurry of negative data.”
WTI for May delivery lost 5 cents to $58.99 a barrel on the New York Mercantile Exchange as of 10:12 a.m. London time, after falling as much as 71 cents earlier. Prices declined 94 cents on Friday, paring the weekly gain to 52 cents, or 0.9 percent.
Brent for May settlement dropped 15 cents to $66.88 a barrel on the London-based ICE Futures Europe exchange. It fell more than 2 percent over the previous two sessions. The global benchmark crude was at a premium of $7.86 to WTI.
“The risk-off sentiment is pressuring commodity prices,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul. “Investors are worried about the potential for a long-term recession, and that’s pushing down expectations for future demand.”
European and Asian stocks tumbled Monday after the gap between the 3-month and 10-year U.S. debt yields turned negative on Friday. The inversion came after an index of American manufacturing slowed, and factory output data from France and Germany was weaker-than-expected.
The number of U.S. rigs dropped for a fifth week to the lowest level in almost a year, according to data released Friday by Baker Hughes, easing concern over surging U.S. production. Rigs targeting oil fell by nine to 824 last week, taking the drop so far this year to 53.
Other oil-market news: The Houston Ship Channel won’t reopen until the U.S. Coast Guard verifies that a cloud of cancer-causing benzene has dissipated, and oily runoff from the region’s worst chemical disaster in 14 years poses no threat to vessels or their crews. Citigroup Inc. raised its average forecast for Brent crude by $6 to $70 a barrel for this year as upside price spikes look possible with potential additional supply losses in Venezuela, Iran, Nigeria and Algeria, it said in a note. China’s oil giants aim to spend the most in five years in pursuit of higher energy output. But unlike global rivals investing in top-tier assets, the state-owned producers are trying to boost supply from fields that are either old and high-cost or new and challenging.