Investing.com– Oil prices fell in Asian trade on Friday, extending recent losses after unexpected builds in U.S. product inventories drummed up concerns over sluggish fuel demand, while signs of weakening business activity in top importer China weighed.
An upcoming meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+) was also in focus, with the cartel likely to extend ongoing production cuts past a June-end deadline.
expiring in July fell 0.3% to $81.61 a barrel, while fell 0.4% to $77.64 a barrel by 21:28 ET (01:28 GMT).
Both contracts were set to lose nearly 5% each in May, amid persistent concerns over sluggish demand this year.
US inventories fall, but product build drives demand jitters
U.S. saw a bigger-than-expected draw in the week to May 24- at nearly 4.2 million barrels against expectations of 1.6 mb.
But grew 2 mb, more than expectations for a build of 1 mb, while grew 2.5 mb against expectations for a build of 0.4 mb.
The builds in the product inventories drummed up concerns that demand in the world’s biggest fuel consumer was sluggish going into the travel-heavy summer season.
While travel is set to increase in the next two months, it could grow less than expected amid demand headwinds from sticky inflation, high interest rates and cooling economic growth.
Fears of slowing U.S. economic growth rose on Thursday after a revised reading showed the U.S. economy grew less than initially expected in the first quarter.
China PMIs disappoint, add to demand fears
Purchasing managers index data showed on Friday that Chinese manufacturing activity unexpectedly shrank in May, while non-manufacturing activity grew at a slower-than-expected pace.
The readings indicated that Chinese business activity was cooling after a brief rebound over the past two months, and ramped up concerns over sluggish demand in the world’s biggest oil importer.
The data also indicated that bumper stimulus measures from Beijing had so far provided only limited support for the Chinese economy, and that more supportive measures were needed.
PCE inflation data awaited
Soft U.S. economic readings this week saw focus turn squarely towards upcoming data, which is the Federal Reserve’s preferred inflation gauge.
The reading is due later on Friday and is widely expected to factor into the central bank’s outlook on interest rate cuts.
Fears of high-for-longer U.S. interest rates have been a key weight on oil prices in recent sessions, amid growing concerns that high rates will dent economic activity in the coming months, stymying oil demand.
