Crude futures last week recorded their first weekly loss since March.
Oil prices fell on Monday amid concerns of further interest rate increases, which traders fear could weigh on economic growth and dampen global fuel demand.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.40 per cent lower at $81.33 a barrel at 3.19pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.31 per cent at $77.63 a barrel.
On Friday, Brent settled 0.69 per cent higher at $81.66 a barrel, while WTI added 0.65 per cent to close at $77.87 a barrel.
A Flourish map
Business activity in the US and eurozone accelerated in April, preliminary data showed, making the case for another rate increase by global central banks.
S&P Global said its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to 53.5 in April, up from 52.3 a month earlier, signalling the quickest upturn in business activity since May 2022.
The service sector registered a “sharper” rate of growth, which companies attributed to higher customer confidence, an increase in new orders and improved job employment, the report said.
The PMI has stayed above the 50 neutral level, which separates growth from contraction, for three consecutive months, indicating expansion momentum in the private sector.
The HCOB Flash Eurozone Composite PMI Output Index, a measure of overall economic health in the region, surged to an 11-month high of 54.4 in April from 53.7 in March.
“The positive print should help add to arguments that the Federal Reserve will hike once more at its early May meeting, hiking rates by 25 basis points,” said Edward Bell, senior director, market economics, Emirates NBD.
“Several Fed speakers came out in support of taking rates above 5 per cent in recent days,” said Mr Bell.
Last week, oil prices posted their first weekly loss since March, dragged down by fears of recession in the US and concerns about global demand for crude.
Brent has given up nearly all the gains made after Opec+ producers announced voluntary crude output cuts of 1.16 million barrels per day on April 2.
The output curbs, which will be in place starting from May until the end of December, are aimed at supporting the stability of the oil market, producers said.
Russia, a part of the 23-member alliance of crude producers, also said it would extend its output cut of 500,000 bpd until the end of this year.
Moscow had previously pledged to curb production until June in response to the price caps imposed by the West on exports of its crude oil and refined products.
“Overall, it has been a couple of challenging months for traders with the market whipsawing, first from the banking crisis, then Opec+ production cuts and now continued worries about the risk of recession and its impact on demand,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“A concern is currently playing in the refined product market, where margins are under pressure across all the major regions,” said Mr Hansen.
“Lower refinery margins into the peak demand season may lead to lower refinery demand and with that lower demand for crude oil.”