Oil holds above US$80/bbl on OPEC+ cuts, traders eye China recovery
Brent crude futures nudged 6 cents higher to US$86.37 a barrel by 0650 GMT, while U.S. West Texas Intermediate crude was at US $82.55 a barrel, up 3 cents
Oil prices edged up slightly on Monday, supported by OPEC+’s plans to cut more output, while investors eyed Chinese economic data for signs of demand recovery in the world’s second-largest oil consumer.
Brent crude futures nudged 6 cents higher to US$86.37 a barrel by 0650 GMT, while U.S. West Texas Intermediate crude was at US$82.55 a barrel, up 3 cents.
Both contracts notched their fourth weekly gains last week – the longest-such streak since mid-2022 – after the International Energy Agency (IEA) forecast record demand in 2023 of 101.9 million barrels per day (bpd), up 2 million bpd on last year.
However, the IEA warned in its monthly report that the output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of the year and could hurt consumers and a global economic recovery.
Rising costs for Middle East crude supplies, which meet more than half of Asia’s demand, are already squeezing refiners’ margins, prompting them to secure supplies from other regions.
Refiners are also ramping up gasoline output ahead of peak summer demand, while cutting diesel production amid worsening margins.
“While the flat price and time spreads have strengthened on the back of expectations of a tighter market, demand concerns clearly remain,” ING analysts said in a note.
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