Singapore — Oil prices fell on Monday as an easing of geopolitical risks in the Middle East and the prospect of another Opec+ output hike in August improved supply expectation amid persistent uncertainty over the outlook for global demand.
Brent crude futures fell 13c, or 0.19%, to $67.64 a barrel by 3.44am GMT, ahead of the August contract's expiry later on Monday. The more active September contract was at $66.62, down 18c.
US West Texas Intermediate (WTI) crude dropped 32c, or 0.49%, to $65.2 a barrel.
Last week, both benchmarks posted their biggest weekly decline since March 2023, but they are set to finish higher in June with a second consecutive monthly gain of more than 5%.
A 12-day war that started with Israel targeting Iran’s nuclear facilities on June 13 pushed up Brent prices, which surged above $80 a barrel after the US bombed Iran’s nuclear facilities and then slumped to $67 after President Donald Trump announced an Iran-Israel ceasefire.
The market had stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire, IG markets analyst Tony Sycamore said in a note.
Further weighing on the market, four delegates from Opec+, which includes allies of oil cartel Opec, said the group was set to boost production by 411,000 barrels a day in August, following similar-sized output increases for May, June and July.
Opec+ is set to meet on July 6 and this would be the fifth monthly increase since the group started unwinding production cuts in April.
However, bearish pressure from concerns over slower global oil demand, particularly from China, is likely to persist.
Uncertainty around global growth continued to cap prices, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
China’s factory activity contracted for a third consecutive month in June, as weak domestic demand and faltering exports weighed on manufacturers amid US trade uncertainty.
In the US, the number of operating oil rigs, an indicator of future output, fell by six to 432 last week, the lowest level since October 2021, Baker Hughes said.
Reuters
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