Oil Dips Ahead Of Key Wednesday Event As Data Coming From Asia Takes Toll

Oil prices fell on Monday morning in Asia trading ahead of a crucial meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Wednesday that marks the conclusion of the 2020 output reduction pact.

Weak manufacturing data from China and Japan also hung heavy over the demand outlook for the commodity. The Caixin/Markit manufacturing purchasing managers' index (PMI), which measures manufacturing activity in China, fell to 50.4 in July from 51.7 in June, coming in way below analysts’ expectations of 51.5, reported Reuters. 

Data also showed that Japan's manufacturing activity expanded at the slowest rate in 10 months last month.

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Price Movement: West Texas Intermediate (WTI) futures fell 1.2% and were trading close to the $97.4/barrel mark. Brent futures lost 0.98% to trade at $102.95/barrel.

OPEC+ Meet: Oil producers have unwound the record 9.7 million barrels per day (bpd) supply reduction they agreed to in April 2020, when the COVID-19 pandemic had hit demand. The group’s decision may range between keeping the oil output unchanged in September and deciding on a slight increase, as per Reuters.

Analysts are skeptical about a potential increase as most oil producers are struggling to meet their quotas owing to a lack of investment in oil fields.

Expert Take: A CMC Markets analyst said oil prices have little chance of posting deep losses on the back of a weak U.S. dollar and the ongoing supply crunch, according to the report.