Oil extends last week’s sharp retreat as demand worries sour sentiment

Crude oil futures prices fell Monday, with investors digesting worrisome demand updates issued last week and keeping tabs on typically price-supportive risks percolating in the Middle East.

Among the latest headlines, Iran will break the uranium stockpile limit set by Tehran’s nuclear deal with world powers in the next 10 days, the spokesman for the country’s atomic agency said Monday, according to the Associated Press.

This is “likely the latest political posturing from Iran to spark European countries in delivering some relief from the U.S. sanctions that have crippled their economy,” said Edward Moya, senior market analyst at Oanda. “If Iran does abandon the nuclear pact over the next two weeks, that would raise the bar with tensions and the Middle East.”

On Monday, West Texas Intermediate crude for July delivery CLN19, -1.05% fell 58 cents, or 1.1%, to settle at $51.93 a barrel on the New York Mercantile Exchange, following two consecutive session gains.

The attack on two tankers in the Middle East’s Strait of Hormuz last week triggered concerns about disruptions to the global flow of oil and prompted a late-week rally in prices, but the market failed to recoup the 4% loss from Wednesday, sending front-month WTI prices tumbling 2.7% for last week.

U.S. Secretary of State Mike Pompeo accused Iran of orchestrating a series of attacks on tankers in the strait, in what he said was Iran’s effort to get the U.S. to ease up on sanctions. The narrow waterway is seen as the world’s most sensitive choke point for transporting crude.

Meanwhile, August Brent crude BRNQ19, +0.18% dropped $1.07, or 1.7%, to $60.94 a barrel on ICE Futures Europe in Monday action. Brent finished down 2% for last week.

Last week’s losses followed reports of an expected slowdown in oil demand. In a report Friday, the International Energy Agency downgraded its 2019 forecast for global oil demand for a second straight month, citing, in part, a global economic slowdown. The Organization of the Petroleum Exporting Countries had also cut its forecast for growth in world oil demand this year.

“For oil prices to see a sustained rebound, trade uncertainty needs to be removed, [though] geopolitical risks should see Brent and WTI supported around the $60 and $50 a barrel, respectively, said Moya.

The market is also awaiting a decision by OPEC and its allies on whether to extend their production-cut deal past the end of this month, when it expires. Citing comments from Saudi energy minister Khalid al-Falih in Tokyo, S&P Global Platts reported Monday that the Saudis are “absolutely” confident OPEC and non-OPEC partners will agree to extend their oil production-cut deal.

Al-Falih said that all OPEC members, except one, have agreed to delay the group’s June 25-26 meeting to the first week of July, according to the report. The decision to change the date would have to be unanimous.

Read: Debate over OPEC meeting date distracts from decision on output cuts

Back in the U.S., a monthly report from Energy Information Administration Monday showed that crude-oil production from seven major U.S. shale plays is forecast to climb by 70,000 barrels a day in July to 8.520 million barrels a day.

In other energy trading, July gasoline RBN19, -2.10% fell 2.4% to $1.691 a gallon, with prices down 0.4% for last week. July heating oil HON19, -1.46% declined by 1.6% to $1.800 a gallon, after a weekly rise of 0.3%.

July natural gas NGN19, -0.38% ended little changed, down 0.04% to $2.386 per million British thermal units, after a weekly gain of 2.1%.