Oil prices fell as weak Chinese data raised concerns about demand, and traders looked ahead to an OPEC+ meeting on supply policy.
Brent crude fell to around $82 a barrel after losing 1.3% on Friday, while West Texas Intermediate crude fell below $78. Weak credit and inflation data from China showed the government was struggling to boost demand in the world’s biggest oil importer. That weighed on riskier assets including stocks and some commodities.
Meanwhile, on the supply front, Iraqi Oil Minister Hayan Abdul Ghani said over the weekend that Baghdad had cut enough output and would not agree to more. But he later said any decision was up to OPEC and that it would abide by whatever the group decides. OPEC+ meets on June 1.
Crude oil has been on a downward trajectory since mid-April, with prices shedding most of the risk premium from Middle East tensions and pressured by a mixed demand outlook. Spreads, one of the most closely tracked market metrics, suggest the supply situation is improving.
“I expect crude to remain under some downward pressure as the geopolitical risk premium over Gaza continues to fade,” said Vandana Hari, founder of Vanda Insights. Iraq’s comments on OPEC+ supplies were a “tempest in a teacup,” she said.
Iraq, OPEC’s second-largest producer, has been a source of some concern in the group as it has failed to fully implement existing cuts. However, most market watchers expect the broader OPEC+ group to extend the curbs into the second half even as collective spare capacity increases.
The Organization of the Petroleum Exporting Countries is due to release its market outlook on Tuesday, providing clues on global balances, demand outlook and supply dynamics. The International Energy Agency is also due to release a report this week.
The Brent crude spread, the difference between its two nearest contracts, has narrowed to 44 cents a barrel in backwardation, compared with a gap of $1.20 two weeks ago.
