Oil falls more than 1% amid renewed fears of economic recession

Oil drilling rigs

Oil prices closed lower today, July 3, after business surveys showed a decline in global factory activity in June.

Global crude prices ended Q2 2023 with the fourth quarterly loss in a row, which is the longest series of consecutive losses since data recording began in 1988.

Prices edged up in early trade today after Saudi Arabia and Russia announced extensions of voluntary production. However, prices turned lower after economic data renewed fears of economic recession.

According to the S&P Global survey, the pace of growth in China's industrial activity slowed last month, with the Caixin Manufacturing Purchasing Managers' Index falling to 50.5 in June from 50.9 in May, but it was higher than expectations of a decline of 50.2.

The Eurozone manufacturing PMI also hit a 37-month low, falling to 43.4 in June from 44.8 in May, with the US index declining to 46.3 for the month from 48.4 in May.

Voluntary cuts amounted to about 1.5% of global supplies, as Russian Deputy Prime Minister Alexander Novak said that Moscow would reduce its oil supplies during August by 500,000 barrels per day by reducing its exports to global markets. Saudi Arabia announced an extension to the voluntary reduction in production of one million barrels per day during the same month, Reuters reported.

International benchmark Brent crude fell nearly 1%, or 76 cents, to close at $74.65 a barrel, after touching $76.60 during the day.

WTI crude decreased by 1.2%, or 85 cents, to record $69.79 a barrel, after hitting $71.77 during the session.