Physical crude oil markets have weakened as demand is underperforming expectations amid sufficient supply, analysts and traders have told Reuters. Demand appears to be especially underwhelming in Europe, where the key crude grades that underpin the Brent Crude benchmark have weakened in recent weeks, to the widest discounts to Dated Brent for a year. Demand in the U.S. also looks weaker for the coming start of summer travel.
Weaker physical demand and oil prices could give the OPEC group enough reason to continue its current production cuts into the second half of the year. The alliance is meeting on June 1 to decide whether to roll over or start unwinding the cuts of about 2.2 million barrels per day bpd. Last week, the International Energy Agency IEA said that global oil demand growth is expected at just 1.1 million bpd this year, due to weak first-quarter consumption in developed economies.