Brent sheds some earlier gains
The front-month ICE Brent contract has gone down by $1.87/bbl on the day, to $73.28/bbl at 09.00 GMT.
PHOTO: Oil barrels against the OPEC flag. Getty Images
Upward pressure:
Brent has found some support after OPEC’s de facto leader Saudi Arabia announced a voluntary production cut of 1 million b/d from July, bringing its production to 9 million b/d - the biggest cut in years. The bigger OPEC+ group pledged to reduce its combined crude oil output from 2024.
The core OPEC group expects global oil demand growth of 2.35 million b/d this year. The International Energy Agency (IEA) forecasts a similar 2.4 million b/d of growth this year, to 102.3 million b/d, and cited a better-than-expected Chinese demand recovery.
“The last few days have shown how fragile sentiment is in the oil market,” said Giovanni Staunovo, strategist at UBS. "Prices are being driven more by supply news and demand growth concerns,” he added.
Downward pressure:
Brent futures reversed yesterday’s gains after the US Federal Reserve said it expects more rate hikes this year. The central bank, however, kept its interest rates unchanged for this month.
Additionally, weak Chinese export data has weighed on crude oil prices, commented Priyanka Sachdeva, market analyst at Philip Nova.
"China's post-COVID recovery has been bumpy and the mellowed first quarter economic standing has completely swept away any forecast of China's revival pushing the global demand for oil to record highs," she added.
Moreover, Brent futures felt more downward pressure after Goldman Sachs analysts cut its oil price and demand estimates, citing an influx of supply and a fall in demand.
“Higher oil production from the US, Iran and Venezuela have amplified concerns around excess oil supply,” said UBS’ strategist Giovanni Staunovo.
By Aparupa Mazumder
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