Brent edges down on demand concerns from China

The front-month ICE Brent contract has inched lower by $0.27/bbl on the day, to $76.25/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent price drew strong support earlier this week after Saudi-led oil exporters, known as OPEC+, committed to extend production cuts into 2024.

Saudi Arabia pledged a voluntary output cut of 1 million/bbl from July, and certain OPEC+ nations including Russia were provided with lowered output targets at the OPEC+ meeting on 4 June.

A “rapidly tightened” oil supply is expected in the coming weeks, says Phil Flynn, senior account executive of The Price Futures Group. “Signs that global oil demand refuses to crater and talk that Saudi Arabia won’t stop until it makes $80.00 a barrel a floor and not a ceiling,” are raising such expectations, the analyst said in a note.

Downward pressure:

A slowdown in demand from China has been a big concern for the global oil market. Weak figures on manufacturing activity for May were followed by a 7.5% decline in its May exports numbers.

“Crude prices didn't get any favours from China as their economic recovery has disappointed,” OANDA's analyst Edward Moya says.

Oil prices came under pressure amid speculations about the US and Iran reaching a nuclear deal. Prices dropped on Thursday after the UK-based news agency Middle East Eye reported that the US and Iran were negotiating a deal, as per which Tehran would limit uranium enrichment on the condition that the US would ease some sanctions on Iranian crude exports.

However, both countries have denied any such development, according to a Reuters report. This has helped Brent to pare some losses.

By Aparupa Mazumder 

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