Investing.com -- Crude oil prices retreated Monday, handing back some of the previous week’s strong gains after weak inflation data out of China increased concerns about an economic slowdown in the world’s largest crude importer.
By 09:05 ET (13:05 GMT), the U.S. crude futures traded 0.8% lower at $73.27 a barrel, while the Brent contract dropped 0.8% to $77.85.
Weak Chinese inflation prompts demand concerns
China's factory-gate prices fell at the fastest pace in more than seven years in June, government data showed on Monday, while consumer prices were flat on the year, the slowest since 2021.
These figures are the latest to point to a very sluggish recovery in the world's second-largest economy from the ravages of the COVID pandemic.
This is especially disappointing as increases in demand from China were meant to balance out a slowdown in activity in the western economies as their central banks tightened monetary policy in order to combat inflation.
Supply cuts resulted in sharp gains last week
That said, both benchmark oil contracts gained more than 4% last week to touch their highest marks since May, helped by the world's biggest oil exporters, Saudi Arabia and Russia, pledging to further cut supply in August, equating to 5% of global oil demand.
Additionally, Mexican oil company Pemex reported on Saturday that a fire on a major offshore platform in the Gulf of Mexico has led to the loss of 700,000 barrels of crude oil production.
The Energy Information Administration also reported a larger-than-expected fall in U.S. oil stocks last week, suggesting resilient demand by the largest consumer of crude in the world.
Busy week of data looms
The main focus this week will be on Wednesday’s U.S. consumer price index release, which could influence the Federal Reserve’s thinking in terms of future monetary policy.
The official U.S. jobs report pointed to the smallest job gains in two-and-a-half years, but strong wage growth. Elevated core inflation figures will likely cement the Fed raising interest rates at its July meeting, potentially hitting future growth in the world’s largest crude consumer.
Also, both the Organization of Petroleum Exporting Countries and the International Energy Agency will release their latest monthly oil market reports on Thursday.
“Given the macro uncertainty, the market will likely be focused on any changes to demand forecasts in both reports,” analysts at ING said, in a note.