Crude oil declines on China demand concerns, OPEC decision

Investing.com - Crude oil futures declined on Monday, as concerns over the health of China's economy weighed while investors assessed the impact of the Organization of the Petroleum Exporting Countries’ decision to keep its production level steady.

On the ICE Futures Exchange in London, Brent oil for July delivery shed 47 cents, or 0.73%, to trade at $62.84 a barrel during U.S. morning hours. On Friday, Brent slumped to $60.94, a level not seen since April 15, before turning higher to close at $63.31, up $1.28, or 2.06%.

Official trade data released Monday showed that China’s crude oil imports in May fell 11.0% from a year earlier to 23.24 million tons.

The country’s trade surplus widened to $59.5 billion last month from $34.2 billion in April, compared to estimates for a surplus of $45.0 billion.

Chinese exports fell 2.5% from a year earlier, while imports tumbled 17.6%, worse than forecasts for a decline of 10.7%.

A slowdown in domestic demand indicated a recovery in the broader economy remains fragile and may need further government stimulus.

China's economy grew at the slowest pace in six years in the first quarter, underling speculation policymakers will have to introduce further easing measures to jumpstart the economy amid lackluster growth.

The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Meanwhile, the Organization of Petroleum Exporting Counties decided on Friday to maintain its production levels at 30 million barrels per day for at least another six months, despite ongoing concerns over ample global supplies.

The oil cartel said the group's output may even exceed 30 million barrels per day, should there be an increase in production and exports from Libya, Iraq or Iran.

Elsewhere, on the New York Mercantile Exchange, crude oil for July delivery fell 49 cents, or 0.83%, to trade at $58.64 a barrel. Nymex oil prices dropped to $56.83 on Friday, the lowest level since May 28, before jumping $1.13, or 1.95%, to end at $59.13.

Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. fell by 4 last week to 642. The drop marks the 26th straight week of declines.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.20 a barrel, compared to $4.18 by close of trade on Friday.