Oil Weakens Again, What's Going On?
World oil prices slipped again at the start of this week after recording a third consecutive weekly decline. Brent fell below $61 per barrel, while WTI (West Texas Intermediate) approached $57. Pressure stemmed from market optimism about easing trade tensions between the US and China, ahead of new negotiations scheduled for this week. President Donald Trump stated that the threat of higher tariffs on China would likely not be pursued, opening the door to a trade deal.
However, the market also monitored China's economic slowdown, which continued into the second quarter. Although exports increased, household consumption and business spending declined. Meanwhile, a report from the International Energy Agency (IEA) indicated that the oil market is expected to experience a supply surplus until 2026, even larger than previously projected. This put additional pressure on oil prices, which are now on track for their third monthly decline.
Several technical indicators also point to a weakening market. The Brent prompt spread is still showing backwardation (a signal of a tight market), but has narrowed to just 15 cents. More worryingly, the structure between the two December contracts has now shifted into contango, signaling expectations of future oversupply. While Ukraine's attack on Russian energy infrastructure could trigger occasional price spikes, analysts like Citigroup predict that if the conflict subsides, oil prices could plummet to $50 per barrel. (az)
Source: Newsmaker.id
