Investing.com - Oil prices fell sharply in Europe trade on Monday, amid doubts over the likelihood of a deal between Russia and OPEC producers to cut output happening anytime soon.
Oil rallied last week amid speculation OPEC and non-OPEC producers may be edging closer to a deal to cut production in an effort to tackle one of the biggest supply gluts in decades.
Prices came under additional pressure as the release of weak Chinese manufacturing activity data underlined concerns over the health of the world’s second largest economy.
On the ICE Futures Exchange in London, Brent oil for April delivery slumped 65 cents, or 1.81%, to trade at $35.34 a barrel by 09:10GMT, or 4:10AM ET.
London-traded Brent futures surged $3.81, or 10.58%, last week. Brent prices are up nearly $9.00, or 25%, since falling to a 12-year low of $27.10 on January 20. Despite recent gains, Brent ended January with a loss of 3.7% amid ongoing concerns over a global supply glut.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share. Oversupply issue will be exacerbated further as Iran returns to the global oil market in the coming months.
Elsewhere, crude oil for delivery in March on the New York Mercantile Exchange shed 70 cents, or 2.07%, to $32.92 a barrel during morning hours in London.
Last week, New York-traded oil futures rose $1.43, or 4.25%, the second straight weekly gain. The U.S. benchmark has rallied almost $7.50, or 22%, since tumbling below $27 for the first time since September 2003 on January 20.
U.S. oil futures still lost 8.9% in January as investors worried that a huge oversupply in crude was coinciding with an economic slowdown, especially in China.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $2.42, compared to a gap of $2.37 by close of trade on Friday.