By Arathy Somasekhar

Oil Prices Decline Amid Economic Concerns

HOUSTON (Reuters) – Oil prices closed lower on Monday due to worries about demand, exacerbated by disappointing euro zone business activity and a weak Chinese economy.

Brent crude futures for November settled 59 cents lower, or 0.8%, at $73.90 a barrel, while U.S. crude futures for November fell 63 cents, or 0.9%, to $70.37.

Euro zone business activity unexpectedly contracted sharply this month, with the bloc's dominant services industry flatlining and a downturn in manufacturing accelerating.

In the U.S., business activity remained steady in September, but average prices charged for goods and services increased at the fastest pace in six months, hinting at a potential uptick in inflation.

China, the world’s largest oil importer, is grappling with deflationary pressures and struggling to boost growth despite various policy measures aimed at stimulating domestic spending.

Dennis Kissler, senior vice president of trading at BOK Financial, noted, "Disappointing economic numbers from China and a surprise slowdown in European manufacturing are limiting crude demand to its lowest levels this year."

Supply concerns linked to Israel's airstrikes on Hezbollah targets helped to support oil prices. After nearly a year of conflict in Gaza, Israel is now focused on its northern border, where Hezbollah has been firing rockets in support of Hamas.

Kissler added, "More attacks from Israel on Lebanon generate fears that Iran will become increasingly involved, which raises concerns about the risk to oil exports."

Additionally, a tropical disturbance near the Gulf of Mexico threatens oil supply. Shell announced on Sunday it would suspend production at its Stones and Appomattox facilities as a precaution.

Norwegian oil producer Equinor stated on Monday that it is evacuating some staff from its Titan oil production platform in the U.S. Gulf of Mexico, while Chevron is evacuating nonessential personnel from its Gulf platforms.

Preliminary data suggested that U.S. crude oil stockpiles likely decreased by about 1.2 million barrels last week.

Both oil benchmarks rose more than 4% last week, supported by the U.S. Federal Reserve's decision to cut interest rates by 50 basis points and indicate potential further reductions in borrowing costs by year-end.

Chicago Fed President Austan Goolsbee expects "many more rate cuts over the next year" as the U.S. central bank aims for a "soft landing" for the economy, controlling inflation without crashing the labor market.

(This story has been refiled to add the dropped word 'lower' in paragraph 2)