Oil prices are falling amid concerns about economic growth

Oil prices fell by a dollar a barrel on Monday, after weak economic data from China and amid expectations of raising US interest rates again, which erased the impact of the OPEC + production cuts that come into effect this month.

Brent crude fell $1.02, or 1.3 percent, to settle at $78.45 a barrel, while US West Texas Intermediate crude fell $1.12, or 1.5 percent, to $75.66 a barrel.

Data on Sunday showed a sudden drop in activity in China’s manufacturing sector in April, with the sector’s purchasing managers’ index recording its first contraction since December.

“The market is very dependent on what happens in China, and the latest data from the manufacturing sector is disappointing,” said Bert McNally, an analyst at Third Bridge.

He added that China is expected to be the biggest driving force for oil demand growth this year.

The US central bank, which meets on May 2-3, is expected to raise interest rates by 25 basis points. On Monday, the dollar rose against a basket of currencies, making oil more expensive for holders of other currencies.

Oil has been affected by concerns about the banking sector in the past few weeks, and US regulators seized First Republic Bank over the weekend, becoming the third US bank to collapse in two months. JPMorgan later bought most of the troubled bank’s assets.

A voluntary reduction in oil production by about 1.16 million barrels per day, based on the decision of the OPEC + coalition, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, will come into force as of this month.

Oil prices got some support from US manufacturing activity moving away from a three-year low in April, with new orders improving slightly and employment rebounding.

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