The price of oil rose by about 0.3%, helped by news from China and expectations that OPEC+ will agree to extend current supply restrictions at the next meeting.
Prices fell by about $1 per barrel on Friday as Fed officials debated whether U.S. interest rates were high enough to bring inflation back to 2%. Overall, oil prices have been falling since mid-April amid lower risk premiums caused by tensions in the Middle East. Oil also came under pressure from mixed demand prospects.
While China's recent weakness signaled that the government is struggling to boost demand in the world's top crude importer, a series of planned long-term sovereign bond sales point towards authorities seeking to do more to aid growth, and support energy consumption.
The negative dynamics of the US currency also provided minor support to prices. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.06% to 105.24.
In addition, the market still expects that OPEC+ members can extend the supply cuts for the second half of the year. The Iraqi Oil Minister said that Iraq, the second largest oil producer in OPEC, is committed to the voluntary reduction of oil production agreed by OPEC and seeks to cooperate with member countries in efforts to achieve greater stability in global oil markets. Earlier this month, OPEC+ accused Iraq of exceeding its production quota by 602,000 barrels per day during the first three months of 2024. The group said Baghdad had agreed to offset this with additional production cuts by the end of the year.
Tomorrow, OPEC will publish its market outlook, offering clues on global balances, the outlook for demand, as well as supply dynamics. A report from the International Energy Agency is also due this week.