Oil declined, paring a weekly gain, as falling equity markets in Europe and Asia added to growing concerns over global demand for the commodity.

Brent crude futures slipped 0.4 per cent in London, shrinking this week’s advance to 3.5 per cent. The outlook for crude has darkened as the International Energy Agency curbed forecasts for consumption growth this year, and warned of a “major surplus” over the longer term.

China’s decades-long boom in oil processing could falter this year for the first time in data that extends back to 2004 — excluding a Covid-hit 2022 — according to most market watchers surveyed by Bloomberg. U.S. Federal Reserve officials this week penciled in only one interest-rate cut this year, cooling market sentiment.

“In view of the still uncertain economic outlook for the major economic regions, a further price increase is not to be expected for the time being,” said Barbara Lambrecht, an analyst at Commerzbank AG.

European stocks headed for their worst week since January on growing concerns about political turmoil in France. In Asia, MSCI’s Asia Pacific index slipped as losses in Australian and Chinese stocks offset gains in Japan’s benchmark.

Crude prices have retreated 11 per cent from a peak reached in mid-April, on concerns over China’s economic outlook and signs of a flood of new oil supplies from the U.S. and other parts of the Americas. The market briefly wobbled after the OPEC+ alliance outlined plans to gradually restore halted output in the fourth quarter, but stabilized after the group signaled it might not go ahead.

Still, timespreads are holding in a bullish, backwardated structure, where later-dated contracts trade at a discount to nearer ones, indicating tight supplies. The gap between Brent’s two nearest contracts was at 40 cents a barrel in backwardation, compared with 28 cents a week ago.

Prices:

  • Brent for August settlement fell 0.4% to US$82.41 a barrel at 9:55 a.m. in London.
  • WTI for July delivery dropped 0.6% to $78.16 a barrel.