(Bloomberg) — Oil edged lower as traders looked ahead to an OPEC+ meeting on supply policy, with Iraq giving out mixed messages about its stance.
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Global benchmark Brent fell toward $82 a barrel after losing 1.3% on Friday, while West Texas Intermediate was below $78. Iraqi Oil Minister Hayyan Abdul Ghani initially said at the weekend that Baghdad had cut production enough and wouldn’t agree to more. But later, he said that any decision was a matter for OPEC, and it would stick to whatever the group decided.
Crude has been on a downward trajectory since mid-April, with prices giving up most of the geopolitical risk premium triggered by tensions in the Middle East, and they’ve also been pressured by a mixed demand outlook. Chinese producer-price inflation extended a long decline that highlighted weak consumption in the world’s biggest oil importer.
“I do 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, describing Iraq’s comments as a “storm in a teacup.”
Iraq, the second-biggest producer among OPEC members, has been the source of some unease in the group as it’s failed to fully implement existing reductions. Still, most market watchers expect the wider OPEC+ group will extend curbs into the second half even as collective spare capacity expands.
The Organization of the Petroleum Exporting Countries is due to deliver its market outlook on Tuesday, offering clues on its assessment of global balances, the outlook for demand, as well as supply dynamics. Its policy meeting on output quotas will be held on June 1. The International Energy Agency’s latest report, meanwhile, is also due this week.
Timespreads signal conditions are becoming less tight. While still in a bullish, backwardated structure, the gap between Brent’s two nearest contracts, has narrowed to 42 cents a barrel, compared with $1.20 two weeks ago.
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