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Oil prices eased in early Asian trade on Monday as economic concerns in China weighed on fuel demand outlook although Brent stayed perched above $90 a barrel, supported by tightening supplies after Saudi Arabia and Russia extended supply cuts.
Brent crude fell 49 cents, or 0.5%, to $90.16 a barrel by 0022 GMT while U.S. West Texas Intermediate crude was at $86.77 a barrel, down 74 cents, or 0.9%.
“Concerns about Chinese economic growth weighed on sentiment across commodities,” ANZ analysts said in a note.
“The move was exacerbated by a stronger USD, which kept investor appetite low,” they added, referring to the greenback which has risen for eight straight weeks.
Both contracts gained in the past two consecutive weeks with Brent settling at its highest since November on Friday, after Saudi Arabia and Russia announced last week they will extend voluntary supply cuts of a combined 1.3 million barrels per day until the end of the year.
The International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) are due to release their monthly reports this week.
“Any sign of strong demand from oil market reports from IEA and OPEC will likely push oil prices higher,” ANZ analysts said.
In the United States, producers added an oil rig last week for the first time since June, Baker Hughes said in its weekly report, but the total count was still down 127, or 17%, below this time last year.
WTI is likely in the process of marking out a new higher range at above $83 and below resistance at $93.50 in the weeks ahead, with concerns around demand in China and Europe capping further upside, IG analyst Tony Sycamore said in a note.
