Oil fell on Monday as weak economic data from China, the world’s largest energy consumer, weighed on prices and an OPEC source played down talk of an emergency meeting to stem the decline.
China’s manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world’s second-biggest economy at a time when the market is already weighed down by a large supply overhang.
“The weak China PMI (purchasing managers’ index) is driving down prices because China weighs on the entire commodities sector from the demand side of the equation,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
Brent April crude futures were down 35 cents at $35.64 a barrel at 1023 GMT. The March Brent contract, which expired on Friday, settled at $34.74 a barrel.
U.S. West Texas Intermediate (WTI) was down 57 cents at $33.05 a barrel.
A senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries.
Oil prices jumped last week after Russian energy officials said they had received proposals from OPEC lynchpin Saudi Arabia on managing output and were ready to talk.
“We do not expect such a cut will occur unless global growth weakens sharply from current levels, which is not our economists’ forecast,” investment bank Goldman Sachs said in a report.
OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts.
Partly because of Iran’s return, OPEC production has jumped to 32.60 million barrels per day (bpd), its highest in years, adding to a global glut of over 1 million bpd in excess of demand, which has pulled down oil prices 70 percent since mid-2014.
Oil exports from OPEC member Iraq rose in January, its oil ministry said on Monday, reaching an average of 3.285 million bpd, up from 3.215 million bpd the previous month.
However overall production from its southern fields fell last month, slipping from a record high reached at the end of last year.
BMI Research has cut its oil price outlook for Brent to a 2016 average of $40 per barrel from $42.50 previously, and said WTI would average $39.50.
“Counteracting oil’s upside momentum in 2016 will be the weakness of the Chinese yuan, lingering concerns over global economic growth and the well-stocked inventories of crude and fuels,” BMI said, adding that a gradual price rise was expected in the second half of the year.