(Bloomberg) — Oil edged lower as traders awaited an OPEC+ meeting on supply policy, with Iraq issuing mixed messages on its position.
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Global benchmark Brent crude fell to $82 a barrel after losing 1.3% on Friday, while West Texas Intermediate was below $78. Iraqi Oil Minister Hayyan Abdul Ghani initially said over the weekend that Baghdad had cut production enough and would not accept more. But later he said any decision was up to OPEC and it would stick to what the group decides.
Crude has been on a downward trajectory since mid-April as prices have given away most of the geopolitical risk premium triggered by tensions in the Middle East, and they have also been pressured by a mixed demand outlook. China’s producer price inflation extended a long decline that highlighted weak consumption in the world’s largest oil importer.
“I expect crude to remain under some downward pressure as the Gaza-related geopolitical risk premium continues to fade,” said Vandana Hari, founder of Vanda Insights, qualifying the comments of Iraq as a “storm in a teacup”.
Iraq, the world’s second-largest producer among OPEC members, has been the source of some unease within the group as it has failed to fully implement existing cuts. Still, most market observers expect the broader OPEC+ group to extend its restrictions in the second half of the year, even as collective spare capacity increases.
The Organization of the Petroleum Exporting Countries is due to deliver its market outlook on Tuesday, offering clues on its assessment of global balances, demand prospects, as well as supply dynamics. His political meeting on production quotas will take place on June 1. The latest report from the International Energy Agency is also expected this week.
Signal conditions for time spreads become less strict. Although still in a bullish, backward-looking structure, the spread between the two closest Brent contracts narrowed to 42 cents per barrel, from $1.20 two weeks ago.
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