Investing.com-- Oil prices settled lower Monday, as concerns of weakening global demand and stronger non-OPEC output weighed on sentiment offset rising geopolitical tensions.
At 14:30 ET (14:30 GMT), Brent Oil Futures fell 1.7% to $79.78 a barrel, while West Texas Intermediate crude futures dropped 1.8% to $75.81 a barrel.
US to lead non-OPEC crude output dominance
U.S. crude output is expected to increase by 500,000 barrels per day in the current year, marking a step down in pace from 1 million barrels per day seen last year, but still account for 60% of non-OPEC production growth.
The call from Goldman stokes fears about growing non-OPEC output blunting efforts from OPEC to limit supply.
The meeting of the Joint Ministerial Monitoring Committee, the OPEC+ panel keeping tabs on the oil market, isn't expected to recommend any changes to the current production policy plan of the group on Aug. 1. Traders expect that OPEC+ will continue to serve whether summer demand has been strong enough before starting to unwind part of its current output cuts.
Golan Heights strike ramps up Middle East tensions
A rocket strike in the Israeli-occupied Golan Heights over the weekend reportedly killed at least 12 people, and has been blamed by both Israel and the U.S. on Iran-backed Hezbollah, who have denied responsibility for the attack.
Israel has vowed retaliation against Hezbollah in Lebanon, and Israeli jets hit targets in southern Lebanon on Sunday.
These increasing tensions saw traders attach a degree of risk premium to oil prices, especially in the event of a wider war between Israel and Hezbollah. Such a scenario could potentially disrupt crude supplies in the Middle East.
The news is also seen diminishing the prospect of a ceasefire between Israel and Hamas in Gaza, which had been gaining momentum.
China demand fears, supply worries keep oil on backfoot
However, the crude market has unable to retain earlier gains as the prospect of weaker demand and a potential supply glut in the coming months weighed on sentiment.
Persistent concerns over top importer China, as it grapples with a slowing economic recovery, continued to weigh on oil, after sparking steep losses in crude over the past three weeks.
The prospect of a supply glut in the coming months - amid increased oil production in the U.S. and other non-OPEC countries - has also weighed on oil prices in recent weeks.
The weakness in the market comes ahead of the OPEC+ Joint Ministerial Monitoring Committee meeting, which will be held on Thursday.
The committee is not expected to recommend any changes to output policy, but "if there are any surprises, they would likely come in the form of delaying the start of the gradual easing in supply cuts, which is set to start in October," said analysts at ING, in a note.
Speculators turning negative
The weakness in the crude market of late have resulted in speculators turning increasingly negative.
The latest positioning data shows that speculators reduced their position in ICE Brent by 37,541 lots over the last reporting week, leaving them with a net long of 146,349 lots as of last Tuesday. Speculators also cut their net long positions in NYMEX WTI by 24,312 lots to 239,237 lots.
"Concerns over Chinese demand have led to these speculative outflows," analysts at ING said, in a note. "While this is not isolated to oil, metals have also seen heavy speculative selling recently on the back of China worries."
(Peter Nurse, Ambar Warrick contributed to this article.)