Oil trending down

Oil fell as weak Chinese data raised demand concerns and investors eagerly awaited an OPEC+ meeting on supply policy. Brent fell 1.3% on Friday to $82 a barrel, while U.S. crude was below $78. Weak credit and inflation data from China showed the government was struggling to boost demand in the world’s largest oil importer, weighing on riskier assets including stocks and some commodities. Meanwhile, on the supply front, Iraqi Oil Minister Hayyan Abdul Ghani initially said over the weekend that Baghdad had cut production sufficiently and would not accept more. But he later said any decision was a matter for OPEC and would be up to the group. OPEC+ meets on June 1. Crude has been on a downtrend since mid-April, with much of the risk premium triggered by tensions in the Middle East weighing on prices, while a mixed demand outlook is also weighing on prices. Time spreads, one of the market’s most closely watched measures, suggest conditions are becoming less tight. “I expect crude to continue to see some downside pressure as the geopolitical risk premium around Gaza continues to ease,” said Vandana Hari, founder of Vanda Insights. Hari said Iraq’s comments on OPEC+ supply were “a storm in a teacup.” Iraq, the second-largest producer among OPEC members, has been the source of some irritation in the group as it has failed to fully implement existing reductions. Still, most market watchers expect the broader OPEC+ group to extend restrictions in the second half even as collective spare capacity expands.