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Oil slips to $67 as economy concern counters OPEC cuts

Published: Updated:

Oil slipped to around $67 a barrel on Monday, weighed by concern that an economic downturn may dent fuel consumption, despite the prospect of prolonged OPEC-led oil supply curbs.

Japan’s exports fell for a third month in February and US manufacturing output fell. Analysts at Bernstein Energy said on Monday that while they expect oil demand to rise by 1.3 million barrels per day (bpd) in 2019, a global slowdown could limit growth to below 1 million bpd.

Brent crude, the global benchmark, fell 26 cents to $66.90 a barrel at 1025 GMT. It reached a 2019 high of $68.14 last week. US West Texas Intermediate crude was down 37 cents at $58.15.

Oil edged lower after an OPEC source said a panel meeting on Monday to review progress with an OPEC-led supply cut deal is recommending the producers cancel a policy meeting in April, seen as a bearish outcome to the talks.

“It’s a surprise, I don’t think it was expected,” said Olivier Jakob, oil analyst at Petromatrix. “It’s quite unusual to cancel a meeting.”

Brent still has gained around a quarter since the start of the year due to supply cuts since Jan. 1 led by the Organization of the Petroleum Exporting Countries and allies such as Russia, and US sanctions on OPEC members Iran and Venezuela.

While Saudi Arabia has been cutting output by more than the amount it is required to, canceling the April meeting could suggest an unwillingness by other OPEC and non-OPEC producers to do more to bolster prices, Jakob said.

On Sunday, Saudi Arabia signaled the producers might need to extend the supply curbs of 1.2 million bpd, which run until June, into the second half of 2019.

Rising oil output in the United States has helped to offset the OPEC-led curbs.

US crude oil production increased at the start of 2019, hitting a record 12.1 million bpd in February, data from the Energy Information Administration showed.