(Montel) Oil prices soften on uncertain demand outlook

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Oil prices were softening on Monday amid an uncertain demand outlook and on thin volumes ahead of a US public holiday tomorrow, while the markets awaited fresh impetus from the Opec+ meeting due later this week.

The front-month contract for Brent crude North Sea oil last traded down USD 0.29 at USD 75.12/bbl on Ice Futures, while the US WTI equivalent was USD 0.29 lower at USD 70.35/bbl. 

“The biggest problem at the moment is the uncertain demand outlook,” said ING bank in a note.

Yaw Yan Chong, head of Refinitiv oil research in Asia agreed, telling Montel “sentiment is still largely driven by the global economy and prevailing concerns over a looming recession in Europe and the US, while China’s economic data has not been encouraging in the past two months”.

“Brent has traded in a range of USD 72-USD 77/bbl … I believe there will be limited upside and more downside, unless some unexpected bullish news event occurs”, he added.

“No surprises”

“I also do not expect any surprises in the next round of Chinese economic data, so the market will stay at the current status quo,” said Yan Chong, with manufacturing figures due out today.

The monthly meeting of the Opec producers’ group this Wednesday and Thursday would provide additional clues on the supply side, said market participants. 

However, Yan Chong did not expect “anything drastic … as I believe that output cuts are already at their maximum and even further cuts will not sustain prices at higher levels, as evidenced by the last two rounds of cuts”.

Meanwhile, Vanda Insights said “crude futures … would likely have to wait till Wednesday for fresh cues to emerge and trading activity to pick up, given the 4 July Independence Day holiday in the US”.