Oil extended its weekly losses on Monday morning as data from China indicated a decline in the country’s manufacturing activities, thereby indicating that the country’s economic recovery is going less smoothly than expected.
West Texas Intermediate futures, the U.S. benchmark, fell by 2.3% during the morning session. ‘Investors remain cautious amid mixed economic signals,” ANZ Banking Group Ltd. analysts Brian Martin and Daniel Hynes observed in a note. “A hawkish tone from the Fed could put pressure on energy and metals.”
Data released from China on Sunday showed that the country’s manufacturing activity contracted in April. This shows that China’s economic recovery has become rocky, with the effects of a high-spending Labor Day break in the country beginning to wear off.
With China on holiday through Wednesday, investors’ focus turns to the U.S., where the Federal Reserve is set to decide what steps to take with its interest rate policy later in the week. This comes after a slew of earnings reports as well as more instability in the financial sector, led by the collapse of First Republic Bank.