(Bloomberg) — Oil fell as weak Chinese data raised concerns about demand, and traders looked ahead to an OPEC+ meeting on supply policy.
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Brent crude was trading below $83 per barrel, while WTI was trading near $78. Weak Chinese credit and inflation data at the end of the week showed the government struggling to boost demand, although a report on Monday of a large government bond sale suggested authorities were seeking to do more to help growth.
On the supply side, Iraqi Oil Minister Hayyan Abdul Ghani initially said over the weekend that Baghdad had reduced its production enough and would not agree to more. But he later said that any decision is a matter for OPEC, and that it will adhere to whatever the group decides. OPEC+ meets on June 1.
Crude oil has been on a downward curve since mid-April, with prices giving up most of the risk premium stemming from tensions in the Middle East and also under pressure from a mixed demand outlook. Time periods – one of the most closely tracked market metrics – indicate that conditions are becoming less tight.
“I expect crude oil to remain under some downward pressure, as the geopolitical risk premium related to Gaza continues to fade,” said Vandana Hari, founder of Vanda Insights. She said that Iraq’s comments regarding OPEC+ supplies were a “storm in a teacup.”
Iraq, the second largest producer among OPEC members, has been a source of some concern in the group because it has failed to fully implement the current cuts. However, most market watchers expect the broader OPEC+ group to extend restrictions into the second half even as collective spare capacity expands.
The Organization of the Petroleum Exporting Countries is scheduled to announce its market forecasts on Tuesday, providing clues about global balances, demand expectations, as well as supply dynamics. A report from the International Energy Agency is also due this week.
Brent’s spot spread – the difference between its two closest contracts – narrowed to 44 cents a barrel at the back, compared with a gap of $1.20 two weeks ago.
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