Oil Prices Retreat as China Imports Decline

Oil prices fell Monday on signs of weaker Chinese demand and continued concerns about a global oversupply of crude oil.

Investors are also expected to turn their attention to the June 30 deadline for an Iranian nuclear deal that could pave the way for the lifting of Western sanctions, allowing more Iranian oil to hit the oil market.

Light, sweet crude for July delivery recently fell 77 cents, or 1.3%, to $58.36 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 65 cents, or 1%, to $62.66 a barrel on ICE Futures Europe.

U.S. oil markets have rallied since hitting near six-year lows in March but have struggled to hold above $60 a barrel.

The global oil market remains oversupplied, with Saudi Arabia, Russia, Iraq and the U.S. all producing at multi-decade highs.

On Monday, data showed that China's May crude-oil imports fell 11% on the year. Strong Chinese oil demand has been one of the few pillars of oil support so far this year, and signs of softening demand could weigh on oil prices.

The Organization of the Petroleum Exporting Countries decided at its meeting Friday to maintain its production goal of 30 million barrels a day. The cartel currently produces above that level.

"OPEC decided to leave output unchanged, which adds to oversupply fears and puts pressure on prices," said Norbert Rücker, head of commodity research at Julius Baer, in a statement.

OPEC officials said ahead of the meeting that global demand is rising and supply is shrinking, bringing the market back into balance.

"OPEC ministers last week appeared to be striking a note of cautious optimism that their decision to let market forces dictate supply and demand is working out pretty well," said Barclays analysts in a note. "In fact, the bulk of incoming oil supply and demand data fail to support that view...The oil market surplus, although shrinking in H2 [second half of 2015], is set to persist for the whole year."

Goldman Sachs said in a note that it expects the global oil market to remain oversupplied through 2016.

Worries over excess supply have been exacerbated by a potential nuclear deal between Iran and six world powers.

A deal would probably allow Iran to export an additional 500,000 barrels a day of crude oil in the fourth quarter, Alastair Newton, a senior political analyst at Nomura International, told reporters in Singapore last week. Mr. Newton said there is a "70% probability on" that a deal will be reached.

"That's going to mean that [in the fourth quarter], we could see production running at a rate something like 4% ahead of day-to-day demand for oil globally," he said.

Gasoline futures recently fell 1.2% to $2.0052 a gallon. Diesel futures fell 0.8% to $1.8553 a gallon.