Oil prices slip on Chinese demand concerns, rising United States activity

"Stale speculative long positioning and a reluctance to hold unprofitable positions has been the main force behind the oil rally running out of steam over the last few sessions", said Jeffrey Halley, senior market analyst at brokerage OANDA. For more crude oil prices, please head over to our Oil Price Charts page.

According to a Reuters poll, USA crude stockpiles dropped last week for the seventh week in a row, and gasoline and distillate inventories were also likely down.

On Monday, oil prices dropped by 2.5 percent to their lowest close in three weeks, with WTI Crude settling at US$47.59, the lowest level since July 24.

In May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension. U.S. West Texas Intermediate crude futures CLc1 were trading at $48.51, down 31 cents. "This results in a tug of war that we have witnessed all year and the final outcome is a range-bound market", said Matt Stanley, a commodities broker at Freight Investor Services in Dubai reports CNBC.

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"Opec and Russian Federation still face an uphill battle in reducing the global supply surplus in the face of growth in output elsewhere (US shale oil, Libya, Nigeria) and less than compliant behaviour in their midst (Iraq, United Arab Emirates)", French bank BNP Paribas said in a note.

However, petrol stocks climbed by 301,000 barrels, compared with analyst expectations in a Reuters poll for a 1.1-million barrel decline.

Chinese oil refineries operated in July at their slowest daily rates since September, official data showed.

The Organization of the Petroleum Exporting Countries together with non-OPEC producers such as Russian Federation have pledged to restrict output by 1.8 bpd between January this year and March 2018. Crude oil production in the United States reached 9.423 million bpd for the week ending August 4, with average crude oil production expecting to reach 9.91 million barrels per day in 2018 according to the EIA's latest Short Term Energy Outlook.

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"It is a strong dollar, concern about China demand, and weak volumes", said Phil Flynn, an analyst with Price Futures Group in Chicago. Even so, Citigroup Inc.'s Ed Morse says shale will win over OPEC on oil, as USA drillers can survive due to hedging.

"Excessive supply.is continuing to weigh on oil prices".

On the demand side, analysts see a gradual slowdown in fuel consumption growth.

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