Mubasher: Oil prices dropped on Monday after data from China reaffirmed signals that the world’s second biggest economy is losing steam, despite support from the progress in the trade talks with the US, according to Reuters.

By 7:38 am GMT, US Nymex crude futures dropped by 0.46% to $56.40 per barrel (pb), after advancing by more than 5% last week, the strongest gain since late September, while global benchmark Brent futures fell by 0.37% to $61.79 pb, after rising by over 4%.

Profits earned by China's largest industrial firms dropped last September for the second month running, as producer prices continued their fall, indicating that that an economic slowdown and the prolonged trade conflict with the US are dragging corporate balance sheets down.

“There have been some small profit-taking sells on the weak China data released on Sunday and unwinding of weekend hedges,” Axi Trader Asia Pacific market strategist Stephen Innes was quoted by Reuters.

Nevertheless, “the market remains well supported on the dip,” Innes said, pointing to signals of progress in the trade negotiations between the world’s biggest two economies.

Washington and Beijing announced on Friday that they are both close to concluding some parts of a trade deal.

On the supply front, US energy firms scaled back the number of oil rigs this week, hitting a record 11-month decline as producers deliver on plans to reduce investment in new drilling.

Russian energy ministry on Friday said it will continue cooperation with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated producers to keep markets on an even keel, boosting its predictability.

OPEC members and their partners, an alliance known as OPEC+, agreed since January to slash output by 1.2 million barrels per day (bpd) to shore up markets.

The pact runs to March next year, while the alliance producers will meet to review policy on 5 and 6 December.