U.S. crude oil erases nearly all gains for 2024 as China manufacturing contracts, OPEC output hike looms

U.S. crude oil futures fell more than 1% on Tuesday, largely returning to where they were at the end of last year, as OPEC+ is poised to increase production in coming weeks and China’s economy remains soft.

OPEC+ delegates have indicated that the group is still planning to increase oil production in October, sources told Reuters and Bloomberg.

Manufacturing in China, meanwhile, fell to a six-month low in August, according to data released over the weekend. China is the world’s second-largest importer of crude oil.

Here are Tuesday’s energy prices:

• West Texas Intermediate October contract: $72.45 per barrel, down $1.10, or 1.48%. Year to date, U.S. crude oil has gained 1%.
• Brent December contract: $75.17 per barrel, down $1.56, or 2.03%. Year to date, the global benchmark has dropped 2.4%.
• RBOB Gasoline October contract: $2.04 per gallon, down 5 cents, or 2.53%. Year to date, gasoline has fallen 2.8%
• Natural Gas October contract: $2.19 per thousand cubic feet, up nearly 7 cents, or 3.15%. Year to date, gas has declined 12.7%.

OPEC+, however, made clear in June that it could reverse the planned production increase based on market conditions. The best course for OPEC+ would be to wait until December given slowing demand in China, Helima Croft, head of global commodity strategy at RBC Capital Markets, told clients Monday.

The prospect of increased oil output from OPEC and a weak economy in China are overshadowing major production disruptions in Libya.

Libya’s eastern government in Benghazi has sought to shut down production and exports, amid a dispute with the U.N.-backed government in Tripoli over who should lead the country’s central bank. Libya’s National Oil Corporation declared a force majeure at the El-Feel oil field on Monday.