Oil Falls On Troubling Euro Zone Business Contraction, China Worries

But geopolitical tensions remain a lagging factor in trading motivation: File Image/Pixabay

Oil on Monday continued its accustomed downward trajectory, with reports of a contraction  in euro zone business activity adding to economic worries that have been stoked by ongoing disappointing data from China.

After it was learned that manufacturing declined and the services industry flattened in the euro zone, Brent settled down 59 cents to $73.90 per barrel, while West Texas Intermediate settled down 63 cents to $70.37.

However, oil was said to have been supported by two factors: a tropical disturbance near the Gulf of Mexico that caused Shell, Equinor, and Chevron to announce that it was suspending production and evacuating non-essential personnel from the region; and ongoing hostilities between Israel and Hezbollah, which observers worry might expand and threaten oil exports.

Still, it's questionable to what degree the geopolitical tensions have had on trading: Mazen Salhab, chief market analyst for Middle East and North Africa at BDSwiss, said in emailed comments, "Despite the geopolitical risks supporting oil prices, the market remains cautious as the Middle East conflict has not yet significantly impacted supply."

Meanwhile, media considered another factor that may exacerbate bearish sentiment moving forward: tanker tracking data compiled by Bloomberg showed Libya's crude shipments averaged 719,000 barrels per day (bpd) between September 13-19, more than double the 314,000 bpd in the previous seven days.

In other oil news on Monday, the U.S. Federal Trade Commission was expected sometime this week to greenlight Chevron's proposed acquisition of Hess Corp., valued at $53-billion and one of the biggest oil deals in recent years, on the heels of Exxon's $60 billion purchase in May of Pioneer Natural Resources Co.

However, Chevron would still need to win an arbitration case filed by Exxon Mobil in order to close the deal.