Oil prices stable amid OPEC supply cuts, but US-China trade war drags

Singapore: Oil prices were stable on Monday amid ongoing supply cuts by producer club OPEC, although markets remained tense amid concerns the Sino-US trade war could trigger a broad economic slowdown.

Front-month Brent crude futures, the international benchmark for oil prices, were at USD 68.79 per barrel at 0247 GMT, up 10 cents, or 0.2 per cent, from their last close.

US West Texas Intermediate (WTI) crude futures were at USD 58.54 per barrel, 9 cents below their last settlement.

“The relative strength of the very short-end of the (price) curve likely reflects the market pricing in a known variable of lower supplies from OPEC+,” said Edward Bell, commodity analyst at Emirates NBD bank.

A group of producers led by the Organization of the Petroleum Exporting Countries (OPEC), known as OPEC+, has been withholding supply since the start of the year to tighten the market and prop up prices.

But Monday’s gain could not make up for falls last week, when both crude futures contracts registered their biggest price declines this year amid concerns that the US-China trade dispute could accelerate a global economic slowdown.

“Sentiment remains fragile and vulnerable to any deterioration in US-China trade frictions,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Money managers cut their net long US crude futures and options positions in the week to May 21, the US Commodity Futures Trading Commission (CFTC) said on Friday.

“Some signs of low confidence are creeping into positioning data,” Bell said.

In oil futures markets, the trade war effect is better seen beyond the spot market.