Crude oil was heading for the second week of losses in a row despite the additional production cut Saudi Arabia announced at last Sunday's OPEC+ meeting.
In morning trade in Asia today, Brent crude was changing hands for less than $76 per barrel and West Texas Intermediate was trading at below $71. Both were down from close on Thursday.
It appears that traders are still more concerned about oil demand than they are about the adequacy of supply. With news like Germany's and the eurozone's recession, a decline in Chinese manufacturing activity instead of continued expansion, and shrinking manufacturing activity in the U.S., demand worry is quite justified.
Even the possibility that the Federal Reserve might not announce another rate hike at its next meeting on June 13-14 did nothing to change the dominant sentiment on the oil market.
Earlier this week, these new developments prompted Energy Aspects to revise its forecast for oil prices, slashing them by $15 for the second half of the year. As reasons for the revision, the consultancy cited higher interest rates, the inclusion of a U.S. crude into the Brent basket, and the supply differences in sour and sweet crudes.
According to Energy Aspects, OPEC is reducing the production of predominantly sour crudes, while Brazil and the United States are expanding the production of sweet crudes that make up both the Brent crude and WTI benchmarks.
One additional factor that affected prices this week specifically was a news report that the U.S. and Iran were close to reaching a deal on sanctions and Iran's nuclear program. Both sides promptly denied the report, which stopped the oil price slide but did not reverse it.
There are some expectations that with the start of summer driving season in the U.S. prices will start climbing higher again but any climb could be tempered by demand indications from China.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More