Critics say it's up to OPEC to bolster spirits by presenting a united front: File Image/Pixabay
The modest crude price gains of late last week due to the tanker attacks in the Gulf of Oman evaporated on Monday in favour of the perpetual worry over the economy, fueled by news from the National Bureau of Statistics that China's industrial output growth in May unexpectedly slowed to a more than 17 year low.
Brent lost $1.07 to settle at $60.94 per barrel, while West Texas Intermediate fell 58 cents to settle at $51.93 per barrel - thus contributing to a 20 percent price decline overall since April of this year.
The National Bureau of Statistics reported that its industrial output grew 5.0 percent in May from a year earlier, missing analysts' expectations of 5.5 percent and well below April's 5.4 percent.
Abhishek Deshpande, J.P. Morgan
Markets are looking for that message of solidarity
While entirely in keeping with many predictions made before the U.S./China trade war that China's stellar growth couldn't be sustained, the poor May showings were enough to trigger a fresh round of analytical comments.
Phil Flynn, senior market analyst at Price Futures Group, noted, "All the major reporting agencies are reporting that demand is going to be weaker [and] that has played into the market malaise.
"Things we would normally rally off of, we're not."
Jim Ritterbusch, president of Ritterbusch and Associates, said in a note, "The fact that aggressive OPEC [Organization of the Petroleum Exporting Countries] production restraint so far this year has failed to sustain price strength offers strong testament to the quickly evolving trading theme of demand deterioration virtually around the globe."
Bank of America Merrill Lynch lowered its Brent price forecast from $68 to $63 per barrel for the second half of 2019, based on an assumption of faltering demand.
Even though the general consensus is that the U.S. must reach a trade deal with China in order for the crude market to regain momentum, some experts think OPEC can do a lot to build assurance where uncertainty now reigns.
Abhishek Deshpande, head of oil market research and strategy for J.P. Morgan, told CNBC television that's it's crucial for the cartel in its upcoming meeting to project a sense of solidarity: "markets are looking for that message of solidarity, especially when demand is starting to falter."
Deshpande suggested that the solidarity could start with OPEC setting a definite date and agenda for its meeting, two components that have been noticeably lacking in the build-up to the summit.
Given the current crude climate, it's perhaps not surprising that Bijan Zanganeh, oil minister for Iran, took the opportunity on Monday to tell his Russia counterpart, Alexander Novak, that the global oil market is "unstable and fragile."
He later told reporters, "We discussed the global oil markets and I said the market is highly manipulated by political agendas."