Oil held near the lowest in more than four months in London, as expectations that OPEC will continue to restrain supplies tempered concerns that threats to the global economy will hurt demand.
Brent crude futures traded below $61 a barrel, paring some of Monday’s losses when the international benchmark settled at the lowest since late January. Vitol Group, the world’s largest oil trader, expects OPEC and its allies to prolong a deal to curb output in the second half of 2019, while Saudi Energy Minister Khalid Al-Falih said Monday he was committed to doing whatever it takes to stabilize markets. JPMorgan Chase & Co. said Monday the chance of a U.S. recession in the second half had risen to 40% from 25% a month ago.
Oil has fallen almost 20% from a peak in late April, taking it to the brink of a bear market, as trade relations between Washington and Beijing soured and the White House announced tariffs on Mexican goods. But the market remains supported by signs of tighter supply, with disruptions rife from Venezuela to Russia, and the Organization of Petroleum Exporting Countries expected to keep output limits when it meets in the coming weeks.
“Underpinned by rising trade tensions, the global economic picture has deteriorated,” said analysts at Citigroup Inc. led by Ed Morse. “Yet this macro pessimism masks tangible bullish oil market fundamentals.”
Brent for August settlement was 48 cents lower at $60.80 a barrel on London’s ICE Futures Europe exchange as of 9:38 a.m. local time. The contract lost 71 cents, or 1.2%, to $61.28 on Monday. The global benchmark crude was trading at a premium of $7.79 to WTI for the same month.
WTI was 39 cents lower at $52.89 a barrel on the New York Mercantile Exchange. The contract settled 25 cents lower at $53.25 on Monday, taking its decline since its April 23 high to 23%.
Saudi Arabia’s Al-Falih said he’s confident the OPEC coalition “will do what is needed to sustain market stability beyond June.” Recent oil price volatility is “unwarranted,” he said in an interview with the state-run Saudi Press Agency.
The kingdom boosted production last month by the most this year as output from fellow OPEC member Iran plunged to the lowest since 1990 due to U.S. sanctions, according to a Bloomberg survey of officials, analysts and ship-tracking data. The figures indicate that Saudi Arabia has been willing to replace the lost Iranian barrels, setting the stage for a contentious meeting when the cartel and its partners gather in the coming weeks.
Other oil-market news: Canadian heavy oil in Alberta surged the most since December after wildfires forced a second producer in the region to shut in some operations. Saudi Aramco may have raised Asian prices for its flagship grade to the highest relative to benchmarks in more than five years, but the region’s refiners actually have reason to be relieved. A Norwegian oil-workers union reached a wage agreement with employers, avoiding a strike that would have cut the country’s crude and gas production by about 11%.