(Bloomberg) -- Oil declined as investors waited for more details on how China aims to support its economy over the second half of the year, tracking other commodities lower as the week’s trading kicked off.
West Texas Intermediate fell below $71 a barrel after climbing by more than 2% last week as China cut interest rates and hinted that further support may be delivered. Also in focus for investors was the second day of a visit by US Secretary of State Antony Blinken to Beijing after a positive start to the trip.
Crude-trading volumes, especially for WTI, may be lower than usual on Monday as the US marks the Juneteenth holiday. Among key market metrics, the US crude benchmark’s prompt spread remains firmly in contango, a bearish pricing pattern that indicates ample near-term supply.
Oil has retreated in the first half of the year as China’s recovery from Covid Zero underwhelmed and global supplies remained abundant, including from Russia. In a bid to stem the slide, the Organization of Petroleum Exporting Countries and its allies have announced supply cuts, including a voluntary reduction from Saudi Arabia of 1 million barrels a day that’ll start from July.
“Prices continue to be locked within a consolidation pattern,” said Yeap Jun Rong, market strategist for IG Asia Pte. The worst economic conditions have yet to be seen, which may keep prices low for longer, he said.
While the domestic Chinese media has been awash with reports that further economic support will be forthcoming, details remain scarce. Goldman Sachs Group Inc. became the latest bank to cut forecasts for China’s economy, citing limited options to increase stimulus, according to a research report on Sunday.
Both OPEC and the Paris-based International Energy Agency, which advises rich nations, have forecast that the crude market will tighten substantially in the second half. Still, crude stockpiles at the key hub in Cushing, Oklahoma, have swelled to a two-year high.