Oil futures under pressure after China's crude imports decline

Investing.com - Oil futures were under pressure on Monday, after data showed that China's crude imports declined in May, adding to concerns over a slowdown in global demand.

On the ICE Futures Exchange in London, Brent oil for July delivery inched down 23 cents, or 0.36%, to trade at $63.08 a barrel during European morning hours.

On Friday, Brent slumped to $60.94, a level not seen since April 15, before turning higher to close at $63.31, up $1.28, or 2.06%.

Official trade data released Monday showed that China’s crude oil imports in May fell 11.0% from a year earlier to 23.24 million tons.

The country’s trade surplus widened to $59.5 billion last month from $34.2 billion in April, compared to estimates for a surplus of $45.0 billion.

Chinese exports fell 2.5% from a year earlier, while imports tumbled 17.6%, worse than forecasts for a decline of 10.7%.

A slowdown in domestic demand indicated a recovery in the broader economy remains fragile and may need further government stimulus.

China's economy grew at the slowest pace in six years in the first quarter, underling speculation policymakers will have to introduce further easing measures to jumpstart the economy amid lackluster growth.

The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Elsewhere, on the New York Mercantile Exchange, crude oil for July delivery fell 38 cents, or 0.65%, to trade at $58.75 a barrel.

Nymex oil prices dropped to $56.83 on Friday, the lowest level since May 28, before jumping $1.13, or 1.95%, to end at $59.13.

Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. fell by 4 last week to 642. The drop marks the 26th straight week of declines.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.33 a barrel, compared to $4.18 by close of trade on Friday.

In the currency market, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 96.29, not far from Friday’s highs of 96.95.

The greenback remained supported after an above forecast U.S. jobs report bolstered expectations for a rate hike from the Federal Reserve later this year.

The Labor Department reported that the U.S. economy added 280,000 jobs in May, well ahead of economists forecast for 220,000.

The upbeat data underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Fed could start to hike interest rates at its September policy meeting.

Meanwhile, developments surrounding talks between Greece and its international creditors remained in focus.

Over the weekend European Commission President Jean-Claude Juncker urged Greek Prime Minister Alexis Tsipras to come up with alternative economic reforms "swiftly" so that negotiations could continue this week.

Athens delayed a key debt payment to the International Monetary Fund on Friday after Tsipras rejected the proposed reforms put forward by the EC as “absurd”.