Chinese economy, OPEC supply cuts in focus

Oil prices were mixed on Tuesday, pressured by a weakening economy, especially in China, yet still supported by ongoing supply cuts from producer club OPEC and U.S. sanctions against Iran and Venezuela.

Front-month Brent crude futures, the international benchmark for oil prices, were at $69.90 at 0106 GMT. That was 21 cents, or 0.3%, below the last session’s close, when Brent rose 2.1%.

U.S. West Texas Intermediate (WTI) crude futures were at $59.03 per barrel. They did not trade on Monday due to a public holiday in the United States, but stood 40 cents, or 0.7%, higher than their last close on Friday.

Traders said Brent prices were under pressure from an economic slowdown hitting China as a result of the ongoing trade war with the United States, which is also expected to dent fuel consumption.

But preventing prices from falling further have been supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) since the start of the year.

OPEC and some allies including Russia are due to meet on June 25 and 26 to discuss output policy going forward.

“Supply-side issues returned to the fore, with crude oil prices rising strongly,” ANZ bank said on Tuesday.

Beyond the OPEC cuts, U.S. sanctions on petroleum exports from Iran and Venezuela have also tightened markets.

“Iran exports remain under pressure as U.S. sanctions bite. This comes as OPEC appears to be heading towards extending the current production cut agreement,” it added.

Trump last year withdrew the United States from a 2015 international nuclear deal with Iran, and Washington is ratcheting up sanctions seeking to end Iran’s international sales of crude oil and strangle its economy.

Washington has also imposed sanctions on Venezuela’s oil exports, in a bid to topple the government under President Nicolas Maduro there.