SINGAPORE, May 15 (Reuters) – Oil prices fell on Monday as concerns over fuel demand from global oil consumers the United States and China offset positive sentiment about tightening supplies from OPEC+ cuts and the resumption of U.S. purchases for inventories.
Brent crude was down 26 cents, or 0.35%, at $73.91 a barrel by 0638 GMT, while US West Texas Intermediate crude was at $69.34 a barrel, down 20 cents, or 0.29%.
Last week, both benchmarks fell for a fourth week in a row, the longest streak of weekly declines since September 2022, amid concerns that the U.S. could enter recession at “significant risk” of a historic default within two weeks of June.
Investors sought safe havens like the US dollar, strengthening the currency and making dollar-denominated commodities more expensive for holders of other currencies.
“Oil prices are still under pressure from a sluggish demand outlook as China’s economic reopening progress appears flat,” said CMC market analyst Tina Deng, adding that the US bank failure has also rattled the market.
Investors will look to China’s economic data on industrial production, fixed asset investment and retail sales in the coming week for signs of an improvement in oil demand, he said.
“At a time of uneven reopening in China and the ex-date for the debt ceiling fast approaching, concerns that the U.S. is facing a growth slowdown are topped by a rally in the U.S. dollar, with market sentiment on crude oil looking good,” said IG analyst Tony Sycamore.
However, global crude supply could tighten in the second half as the OPEC+ group, the Organization of the Petroleum Exporting Countries, and its allies, including Russia, make further production cuts.
The group announced in April that some members would cut production by about 1.16 million barrels per day, bringing the total level of cuts to 3.66 million bpd, according to Reuters calculations.
However, Iraq does not expect OPEC+ to make further cuts in oil production at their next meeting in June, its oil minister Hayan Abdel-Ghani said.
The U.S. may resume buying oil for the Strategic Petroleum Reserve (SPR) after ending sales mandated by Congress in June, Energy Secretary Jennifer Granholm told lawmakers Thursday.
The announcement was followed by a weekly report by energy services company Baker Hughes Co ( BKR.O ) that showed the U.S. oil rig count fell by two this week to 586, their lowest since June 2022, while the number of gas rigs fell. 16 to 141.
Meanwhile, leaders of the Group of Seven (G7) nations may announce new measures at their May 19-21 meetings, aimed at evading sanctions involving third countries, officials with direct knowledge of the discussions said.
Tightening sanctions would undermine Russia’s future energy production and restrict trade that supports the Russian military, the people said.
The world’s No. 1 in crude oil imports. India and China, the No. 3 and No. 1 countries, have been the main buyers of Russian crude since December when the European Union imposed a ban.
Statement by Florence Tan; Editing by Muralikumar Anantharaman
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