Oil prices decline 1%, dollar edges down

Oil futures fell nearly 1% in Asian trade as the dollar index backed off September 2002 highs, following earlier Chinese data and ahead of a batch of US data today.

As of 06:01 GMT, US crude futures due August fell 1.04%% to $97.45 a barrel, while Brent September futures fell 0.78% to $103.07 a barrel, as the dollar index slipped 0.05% to 105.82. 

From the US, the manufacturing PMI improved to 49 from 47.4 in June, missing estimates of 50.3, while the services PMI fell to 53.8 from 54.7, missing estimates of 53.9.

Both local and international demand on manufacturing goods in China are weak, thus leading to a contraction in the sector last month, with hope for a recovery in September with support from the government. 

Chinese exports are expected to be weaker as global demand suffers, with the US economy undergoing recession.

From the US, the services PMI is expected down at 52.3 in June from 52.7 in May, while construction spending is expected up 0.3%.

US President Joe Biden said that latest US quarterly recession isn't surprising as the Fed is trying to control inflation, however he asserted his government was on the right path.

The US administration's new inflation reducing low will impose a 15% tax on international companies, however no taxes will be raised on those earning $400 thousand and lower.

The Federal Reserve decided to hike rates by 75 basis points to 2.5%, the highest since December 2018 as expected.

Currently, two-year US treasury yields stand at 3.203%, while 10-year yields hit 2.954%, such divergence is usually indicative of upcoming recession.

It was confirmed last week that US President Joe Biden got a positive Covid 19 diagnosis, with light symptoms.

Medical officials in the US warned from a new Covid 19 wave in the US and worldwide, one that's particularly virulent, and asserting the pandemic isn't over yet.

Europe recently allowed several state-owned Russian oil companies to sell their products to several members of EU countries, however the US is seeking to put a limit on prices of Russian oil.

Baker Hughes data last week showed US oil rigs steadied at 605 rigs, the highest since March 2020, while rising in June for the 23rd month in a row.

US oil output on the other hand rose 200 thousand bpd last week to 12.1 million bpd, off April 2020 highs.