Oil holds decline with higher OPEC+ supply weighing on outlook

Oil steadied after a sharp drop with the prospect of more OPEC+ supply weighing on the outlook, as the US-China trade war drags on.

Brent traded above $60 a barrel after losing 1.7% on Monday, and West Texas Intermediate was near $57. Saudi Arabia warned of further production hikes if overproducing members of OPEC+ don’t fall in line. The cartel decided over the weekend to boost output in June, according to delegates.

The kingdom followed the supply agreement with an increase to the cost of its crude to Asia next month, although the price hike partly rolls back a bigger-than-expected cut in May for its main Arab light grade.

The supply increase by OPEC and its allies has exacerbated bearish headwinds for oil futures, which are near a four-year low as trade tensions between the world’s two biggest economies threaten global growth. President Donald Trump said he was willing to lower tariffs on China “at some point,” but had no plans to speak with his Chinese counterpart this week.

“I won’t hold my breath for oil starting to climb anytime soon,” Vandana Hari, the founder of Singapore-based Vanda Insights, said on Bloomberg Television. If OPEC+ continues to boost supply to punish overproducing members, that “would probably spell quite a glut in the market,” she added.

There’s been tentative signs of weakness in the Middle Eastern crude market, with several price gauges easing in recent sessions. The premium of Oman and Murban grades over the regional Dubai benchmark has narrowed.