Futures Movers: Oil prices edge back after OPEC+ gathering, as traders focus on weak China data

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Oil futures declined Monday morning, retreating from their highest settlement since September, after signs of economic weakness in large-exporter China undercut bullishness in the aftermath of last week’s important gathering of global producers.

Data out of China showed that global exports were off 1.1% from a year earlier at $221.7 billion, refreshing concerns about the world’s second-largest economy and its potential impact on oil uptake.

China’s exporters have been hurt by the U.S. tariffs, as both countries attempt to resolve a nearly yearlong dispute ahead of a Dec. 15 deadline that will see annual tariffs on $156 billion in China goods raised to 15%.

West Texas Intermediate crude for January delivery CLF20, -1.37% fell 59 cents, or 1%, at $58.62 a barrel on the New York Mercantile Exchange, after the commodity booked a 7.3% weekly gain on Friday, marking the biggest such rise since the week ended June 21, according to Dow Jones Market Data.

February Brent crude BRNG20, -1.07%  shed 59 cents, or 0.9%, to $63.80 a barrel on ICE Futures Europe, after the global oil benchmark logged a 6.5% weekly return — the biggest such rise since the week ended June 21, according to Dow Jones Market Data.

Friday saw both benchmarks notch their highest settlements since around September.

Crude-oil prices have been mostly influenced by negotiations between big producers within the Organization of the Petroleum Exporting Countries, as well as major allies, forming a group known as OPEC+, which met last week in Vienna.

OPEC and its allies agreed to officially cut production by 500,000 barrels a day on top of its current reduction agreement, beginning in January. The additional reductions will take total output cuts for the OPEC+, to 1.7 million barrels a day, including the current cuts of 1.2 million barrels a day from October 2018 levels.

“This decision crystallizes an important shift in strategy to managing short-term physical imbalances rather than trying to correct perceived long-term imbalances through open-ended commitments,” according to a research note from commodity analysts at Goldman Sachs after the OPEC+ meeting.

However, market participants are worried about global producers’ compliance with the new production cuts and sluggishness in the global economy.

“The increase in production cuts, while an attempt by OPEC producers to bolster prices, runs the risk of pushing up prices to the extent that they choke off demand in what is a global economy that, while showing some signs of a recovery, still looks fragile,” wrote Michael Hewson, chief market analyst at CMC Markets U.K., in a research note.

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