- OPEC and its allies extended output cuts to the end of June
- China unveils 5% GDP growth target this year at key meeting
Oil fluctuated between gains and losses as the economic outlook in the biggest importer China vied with OPEC+’s widely expected extension of output cuts. A slew of announcements from China’s National People’s Congress received only a lukewarm response from investors. Crude has been on a slow-motion ascent that has seen Brent gain around 7% this year, aided by strength in physical markets as chunks of global shipping avoid the Red Sea and OPEC+’s limiting of supply. That optimism has been tempered by strong production from outside of the cartel, a shaky demand outlook in China and the paring back of expectations for when central banks will start monetary easing. “OPEC+ must ensure that the measures agreed are implemented as strictly as possible so that the oil price remains above $80 per barrel even if the geopolitical risk premium recedes,” said Commerzbank analyst Carsten Fritsch. “An oversupply in the second quarter should now be avoided. OPEC increased oil production last month as Libya restarted its biggest field, while other members faltered in the delivery of new cutbacks. The group’s output rose by 110,000 barrels a day to 26.68 million a day, according to a Bloomberg survey, as the North African nation ramped up the Sharara field, which was closed earlier in the year due to protests. the United Arab Emirates, continued to pump above a new quota set at the start of the year. However, an extension for a further three months was already expected.” China set its annual growth target at around 5%, raising expectations for officials to unleash more stimulus as they try to lift confidence in a slowing economy. The nation also set a more ambitious target for reducing the energy needed for economic expansion, or energy intensity, this year.