DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange fell more than 2% Monday after China's macroeconomic data showed their post-COVID recovery remained lopsided in April, with the production side of the economy lagging the rebound in consumption.

Overnight data out of China revealed the manufacturing PMI index unexpectedly fell into contraction last month, sliding to 49.2 from 51.9 in March -- the first time since December 2022 when it was below the 50 mark. Sub-indexes for new orders, new export orders and manufacturing employment were all below 50. The decline in China's manufacturing activity comes despite strong government spending and robust demand in the services industries. A non-manufacturing index of activity in the services and construction sectors also softened to 56.4 from 58.2 in March but still showed an expansion in these sectors of the economy. April PMI data underscores the uneven recovery in China that is probably too narrow to be sustained. This worrisome trend doesn't bode well for the global oil demand outlook that has been propelled by expectations for China's post-COVID rebound.

Diesel and gasoline markets in Asia have weakened significantly over the past month, despite the re-opening of the region's largest economy -- China, according to trade sources. In Singapore, profits from producing middle distillates more than halved in recent weeks to the lowest level this year -- another bearish sign for the outlook on this market. Bloomberg News reported that some refiners in the region have already cut run rates as margins sink and China's exports of refined products surge amid weak domestic demand.

In financial markets, U.S. equity futures were steady and the dollar index rallied against a basket of foreign currencies after California regulators, along with the Federal Deposit Insurance Corporation, brokered a sale of First Republic Bank to JPMorgan Chase.

Shares of First Republic Bank tumbled 45% after JPMorgan Chase & Co. won an auction to take over the failed regional bank. Shares of JPMorgan rose 3% on the news. The sale marks the third U.S. bank failure in as many months, following the collapse of SVB Financial in early March, amid a series of unrealized losses on Treasury bond holdings that accumulated amid the Federal Reserve's nine interest rate increases over the past twelve months.

Near 8:30 a.m. EDT, NYMEX June West Texas Intermediate futures fell $1.66 to $75.13 barrel (bbl), while international crude benchmark ICE Brent futures for July delivery dropped back $1.51 bbl to $78.81 bbl. NYMEX June RBOB futures declined to $2.4856 gallon, down by $0.0445 and June ULSD futures fell $0.0359 to $2.3417 gallon.