Oil lost its gains on Monday after Saudi Arabia, the largest crude exporter in the world, stated that it will be maintaining its investments in oil projects. Demand for diesel fuel in China also declined for the fourth month in a row, indicating an industrial slowdown.
Futures declined as much as 4.1% in the U.S.
Despite a growing oil supply surplus, Saudi Aramco has decided not to reduce its investment capacity. Meanwhile, diesel use in China fell 5.6% in December compared to the same period last year. Gasoline consumption growth fell to its slowest pace in over two years.
Oil saw its biggest two-day rally in over seven years, but quickly resumed its decline on Monday as concerns continue to grow over mounting stockpiles in the U.S., and increased production from Russia, Saudi Arabia and Iraq.
Abdalla El-Badri, OPEC Secretary-General, urged oil producers to aid in lowering the global oversupply. He also announced at a recent press conference in London that there are signs supply and demand will return to a balanced state in 2016.
Meanwhile in China, diesel consumption is expected to stay flat or decline in 2016. Gasoline consumption, on the other hand, is expected to rise by 200,000 barrels per day, according to a forecast from the International Energy Agency.